• Indian Rupee (INR) falls after 4 days of gains
  • Indian inflation cools to 6.83%
  • US Dollar (USD) rises ahead of inflation data
  • US inflation is expected to rise to 3.6% YoY

The US Dollar Indian Rupee (USD/INR) exchange rate is rising, snapping a four-day losing run. The pair fell -0.06% in the previous session, settling on Monday at 82.85. At 10:30 UTC, USD/INR trades +0.09% at 82.92 and trades in a range of 82.83 to 83.96.

The Indian Rupee is falling amid a cautious market mood ahead of US inflation data and amid rising oil prices.

Oil prices have risen to a 10-month high following an OPEC report that warned of a tight oil market across the coming quarters owing to the extended supply cuts from Saudi Arabia and Russia. Despite rising oil prices, Indian retail inflation eased in August as food prices cooled. However, it still remained at the upper end of the Reserve Bank of India’s target band for a second straight month.

Annual retail inflation in India was 6.83%, down from 7.44% in July, which marked a 15-month high. Economists had been expecting inflation to cool to 7%.

Food inflation, which accounts for almost 50% of the overall inflation basket, rose 9.94% in August, which was down slightly from 11.51% in July.

The Reserve Bank of India has said that they will continue watching inflation closely, but they expect recent spikes in food prices to ease soon.

The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.1% at the time of writing at 104.70, adding to modest gains yesterday.

The US dollar is edging higher as investors look cautiously ahead to US inflation data which could shed more light on what to expect from the Federal Reserve and the future path of interest rates.

Economists are expecting U.S. consumer prices to rise 3.6% year on year in August, up from 3.2 percent in July.

Meanwhile, core inflation, which strips out more volatile items such as food and fuel is expected to cool two 4.3%, down from 4.7% in July.

Federal Reserve officials have signaled that they could pause interest rate hikes when they meet next week having increased rates at 11 of the 12 past meetings the market is pricing in a 93% probability that the Fed will leave rates unchanged this meeting.

However, what happens in November is less certain. Signs of sticky inflation could point to an increased likelihood of another rate hike before the end of the year.

Hotter-than-expected inflation could raise the chances of a November hike and boost the US dollar.