• Indian Rupee (INR) rises with inflation data in focus
  • Indian CPI is forecast to fall to 4.80%
  • US Dollar (USD) rises ahead of inflation data
  • US debt ceiling worries linger

The US Dollar Indian Rupee (USD/INR) exchange rate is edging lower after two days of gains. The pair rose +0.40% in the previous session, settling on Tuesday at 82.10. At 10:30 UTC, USD/INR trades -0.03% at 82.07 and trades in a range of 81.96 to 82.21.

The Rupee is showing resilience even as India’s consumer inflation is expected to have cooled to an 18-month low in April, keeping it below the Reserve Bank of India’s upper tolerance limit for a second straight month.

Food inflation which is responsible for almost half of the overall consumer price bath yet is expected to have cooled again in April.

Analysts are forecasting CPI will fall to 4.8% in April, down from 5.66% in March. The data comes after the RBI kept interest rates unchanged at 6.5% in the April meeting.

The US Dollar is falling versus the Rupee but is modestly higher against its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.06% at the time of writing at 101.66, extending gains for a third straight day.

The US dollar is edging marginally higher on Wednesday as investors look ahead to the closely watched US inflation data. Inflation, as measured by the consumer price index, is expected to hold steady at 5% year on year in April. Meanwhile, core inflation which strips out more volatile items such as food and fuel, is expected to tick lower to 5.5% from 5.6% in March.

The data comes after the Federal Reserve raised interest rates by 25 basis points last week and hinted that it may consider pausing rate hikes in the June meeting. Today’s inflation data could be a key determining factor as to whether the Fed does decide to pause rate hikes.

In addition to inflation investors are also keeping an eye on U.S. debt ceiling worries after talks between top congressional leaders yesterday made no progress raising concerns that the US could default on its debt obligations early next month.