- Indian Rupee (INR) edges lower after a flat day yesterday
- Indian inflation cooled to 5.02%
- US Dollar (USD) rises after US inflation data
- US CPI rose 0.4% MoM
The US Dollar Indian Rupee (USD/INR) exchange rate is rising after a flat day yesterday. The pair closed unchanged in the previous session, settling on Wednesday at 83.16. At 17:30 UTC, USD/INR trades +0.14% at 83.27 and trades in a range of 83.04 to 83.41.
The Rupee is slipping lower after data revealed that India’s retail inflation cooled to a three-month low in September thanks to softening vegetable prices.
The annual retail inflation was 5.02% in September down from 6.83% in the previous month. This was also below forecasts of 5.5%. However, it remained above the 4% target central banks had signalled would be here before using interest rates.
Food inflation which accounts for almost 50% of the overall consumer price basket Kohl’s to 6.56% in September compared to 9.94% in August.
The RBI met earlier this month and left its key lending rate unchanged for a fourth straight meeting. The central bank reiterated it was looking for inflation of 4%.
The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.45% at the time of writing at 106.30, after three days of losses.
The USD is pushing higher as investors digest the latest US inflation data, which was hotter than expected.
U.S. consumer price index CPI was at 0.4% month on month in September, ahead of the 0.3% forecast, boosted by energy costs. Meanwhile, on an annual basis, US inflation unexpectedly held steady at 3.7% defying expectations of a fall to 3.6%.
Meanwhile, core inflation which excludes food and energy costs, increased by 9.3% in September.
Recent data has highlighted how the strong labour market is underpinning consumer demand and risks keeping inflation above the Fed’s 2% target.
At the Federal Reserve interest rate meeting last month, the majority of policymakers saw the need for another interest rate hike this year, and after today’s data they could maintain that bias despite the recent surge in bond yields.
That said, several Fed speakers this week have suggested that the central bank could keep interest rates on hold when it meets next month suggesting that further rate hikes may not be necessary.
