inr-bank-notes - INR
  • Indian Rupee (INR) rises inflation rose 7.44%
  • Food inflation surged 11.5%
  • US Dollar (USD) rises versus major peers
  • US PMI data is due

The US Dollar Indian Rupee (USD/INR) exchange rate is falling for a sixth straight session. The pair settled -0.06% in the previous session, settling on Tuesday at 83.04. At 11:30 UTC, USD/INR trades -0.33% at 82.76 and trades in a range of 82.76 to 83.08.

The Rupee is rising as Indian retail inflation rose to its highest level in 15 months owing to surging vegetable and cereal prices. Retail inflation jumped sharply to 7.44% in July, up from 4.87% in the previous month. This was well ahead of the 6.4% forecast by analysts and was the highest level since April 2022.

This marked the first time in five months that the figure breached the Reserve Bank of India’s 2% -6% inflation band.

Food inflation, which accounts for almost half of the consumer price basket, jumped 11.5% in July, compared with 4.55% in June.

The data comes as Indian elections come into focus, which could prompt a more decisive response from Modi’s government. Imports of wheat, for example, may need to restart in order to cool prices.

The US Dollar is falling against the Rupee but rising against its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.18% at the time of writing at 103.87, extending gains from yesterday.

The US dollar is heading higher despite 10 year treasury yields falling and as investors look ahead to US business activity data (PMIs). The composite PMI, which is widely considered a gauge for business activity is expected to hold steady at 52 in August, which would support the view that the US economy is heading for a soft landing despite the Fed’s most aggressive hiking cycle in decades.

A stronger-than-expected PMI reading could fuel bets that the Fed will hike rates further to tame inflation in an economy that has been showing persistent strength.

The Jackson Hole Symposium kicks off tomorrow with central bankers across the globe meeting to discuss monetary policy.