inr-bank-notes - INR
  • Indian Rupee (INR) falls after RBI keeps rates on hold
  • The 2nd straight meeting on hold
  • US Dollar (USD) falls after weaker than forecast jobless claims
  • US Fed meeting next week

The US Dollar Indian Rupee (USD/INR) exchange rate is falling, reversing gains from the previous session. The pair rose 0.13% yesterday, settling on Wednesday at 82.61. At 18:30 UTC, USD/INR trades -0.14% at 82.50 and trades in a range of 82.48 to 82.66.

The Indian rupee is falling after the Reserve Bank of India voted to keep interest rates on hold at 6.5% in line with market expectations. This is the second straight meeting that the RBI stayed put on rates, but they did indicate that rates could remain high for some time.

While inflation in India had fallen to an 18-month low at 4.7%, analysts don’t expect inflation to fall meaningfully below 4%, the RBI’s medium-term target anytime soon. The central bank has raised interest rates by 250 basis points since May last year before surprising the market by keeping rates on hold in the April meeting.

The US Dollar is falling across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades -at 0.34% at the time of writing at 103.33, extending from losses from the previous session.

The US dollar is falling sharply lower after the latest labour market data raised concerns over the health of the US economy. Jobless claims jumped to 261,000, up from 232,000 in the previous week. This was well above estimates of 235,000 and marked the most significant jump in initial claims since October 2021.

The data fueled expectations that the Federal Reserve will pause interest rate hikes when it meets next week. The market is now pricing in a 65% probability of a pause in June. However, the market still expects the Fed to raise interest rates again in July.

There is no more high-impacting data today. Investors will look ahead to the release of US inflation data early next week, which will e the final release ahead of the Fed rate announcement on Wednesday.