- Indian Rupee (INR) edges higher for a second day
- Indian inflation is set to ease to 5.5% from 6.83%
- US Dollar (USD) rises versus major peers after mixed Fed commentary
- US FOMC minutes and PPI data due
The US Dollar Indian Rupee (USD/INR) exchange rate is inching lower for a second straight session. The pair fell -0.1% in the previous session, settling on Tuesday at 83.16. At 10:30 UTC, USD/INR trades -0.01% at 83.15 and trades in a range of 83.12 to 84.32.
Indian inflation data is expected to ease to 5.5% in September down from 6.83% in August, bringing it within the Reserve Bank of India’s tolerance band. Moderating food prices and government subsidies, which offset the cost of surging crude oil have helped inflation cool.
The data comes as the RBI kept monthly policy unchanged for a fourth straight month in October and signaled that interest rates would remain high until inflation was brought closer to the 4% midpoint of the central bank’s target range of 2 to 6%.
The US Dollar is holding steady versus the Rupee but rising versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.05% at the time of writing at 105.80, after two days of losses.
The U.S. dollar fell in previous sessions after Federal Reserve officials adopted a less hawkish stance towards monetary policy, raising questions over whether the central bank will raise interest rates again this year.
Atlanta Fed President Raphael Bostic suggested that another rate hike wasn’t necessary, and Minneapolis Fed President Neel Kashkari reiterated those thoughts, also nodding towards higher U.S. Treasury yields as removing the need for the Fed to hike again.
However, Federal Reserve governor Michelle Bowman on Wednesday adopted a more hawkish stance, saying that although some progress had been made on inflation, US central bank will most likely need to tighten policy further in order to restore price stability.
Mixed views from the Federal Reserve officials come ahead of the FOMC minutes of the September meeting, which could shed more light on the future path for interest rates.
The data comes Ahead of US PPI inflation data later today, which is expected to show that hotel inflation rose 1.6% year on year in September, in line with August. The Indian rupee is showing resilience against the stronger U.S. dollar as Indian domestic equities tick higher and oil prices are lower.
