inr-bank-notes - INR
  • Indian Rupee (INR) holds steady despite IMF forecast downgrade
  • RBI could keep rates on hold
  • US Dollar (USD) is flat ahead of US CPI data
  • FOMC minutes also to be released

The US Dollar Indian Rupee (USD/INR) exchange rate is holding steady after three straight days of gains. The pair rose 0.09% in the previous session, settling at 82.04. At 10:00 UTC, USD/INR trades 0% at 82.04 and trades in a range of 82.02 to 82.20.

The Rupee is showing resilience despite the International Monetary Fund said that India’s economy is expected to grow 5.9% in the current fiscal year, down 0.2% from its January prediction and much lower than the Reserve Bank of India’s forecast of 6.5% growth in the same period.

Meanwhile, the RBI is expected to keep its interest rates on pause until the end of the fiscal year as it evaluates the impact of previous hikes on economic growth and inflation.

Last week the central bank surprised the market by leaving the repo rate unchanged.

The US Dollar is holding steady across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades -0.02% at the time of writing at 101.68, extending losses from yesterday.

The US dollar is fooling as investors look ahead to US inflation data which will set expectations for the May Federal Reserve monetary policy meeting.

US inflation, as measured by the consumer price index, is expected to cool to 5.2% year on year in March, down from 6% previously. However, core inflation which removes move volatile items such as food and fuel, is expected to take higher to 5.6% year on year up from 5.5%.

Heading towards the data release, the market is pricing in a 66% probability of a 25 basis point rate hike by the Federal Reserve in May and a 34% probability of a pause to rate hikes. Today’s data could mark the difference between a rate hike or not.

The minutes of the March FOMC will also be released today but may not provide much of a market reaction given the inflation print