• Indian Rupee (INR) falls despite hot inflation
  • Indian retail inflation cooled to 6.44%
  • US Dollar (USD) rises after US CPI data
  • US core inflation rose 0.5% MoM

The US Dollar Indian Rupee (USD/INR) exchange rate is rising for a second straight day. The pair settled +0.34% higher on Monday at 82.23. At 15:00 UTC, USD/INR trades 0.08% at 82.30 and trades in a range of 82.24 to 82.56.

India’s retail inflation cooled to 6.44% in February, helped lower by a fall in the price of some food items. However, it remained above central bank targets and further fueled expectations of an additional rate hike at the next monetary policy meeting.

The inflation rate was above the 6.3% forecast by economists and was also above the Reserve Bank India’s upper band of 2% – 6%.

The RBI is widely expected to raise interest rates by 25 basis points in April. However, should the Fed be forced to ease its stance toward monetary policy due to the SVB fallout then the pressure on the RBI could ease.

The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.17% at the time of writing at 103.80 after four straight days of declines.

The US dollar is pushing higher after a mixed inflation report. On the one hand, headline inflation as measured by the consumer prices index, cooled to 6% year on year, down from 6.4% in January. However, Core inflation which strips out volatile items such as food and fuel, rose 0.5% month on month in February up from 0 .4% in January and ahead of analysts’ expectations. On an annual basis, core CPI rose 5.5%, just 0 .1% lower than January’s year-on-year figure.

The data keeps pressure on the Federal Reserve to continue hiking interest rates even amid the fallout from the Silicon Valley bank. Expectations that The Fed would leave interest rates on hold in the March meeting fell from a 35% probability to just a 12% probability meanwhile, the market priced in a 25 basis point rate hike at 87%.