• Indian Rupee (INR) rises as inflation cools
  • Inflation eases to 4.87%
  • US Dollar (USD) drops after inflation data
  • CPI eases to 3.2%

The US Dollar Indian Rupee (USD/INR) exchange rate is falling for a third straight day. The pair fell -0.15% in the previous session, settling on Monday at 83.18. At 17:00 UTC, USD/INR trades -0.15% at 82.94 and trades in a range of 82.91 to 83.33.

India’s retail inflation cooled in October to its lowest level in four months, moving closer to the central bank’s target of 4%. The Bank of India has said that the 4% target needs to be firmly insight before it can start to consider cutting interest rates.

Retail inflation was 4.87% year on year in October, down from 5.02% in September but slightly above forecasts of 4.80%.

Core inflation was estimated to be between 4.2% to 4.28% compared with 4.5% in September, and food inflation, which accounts for nearly half of the overall consumer price basket, was 6.61%, almost unchanged from an upwardly revised 6.62% in September.

The RBI left the interest rate unchanged last month for a fourth straight meeting and said it remained focused on bringing inflation back towards 4%.

The US Dollar is falling across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades -1.3% at the time of writing at 104.24, marking the third day of losses.

The USD has fallen sharply after weaker-than-expected US inflation data, which is a raised bet of more interest rate hikes from the Federal Reserve.

US inflation, as measured by the consumer price index, rose 3.2% year on year in October, down from 3.7% in September and below forecasts of 3.3% on a monthly basis CPI at 0%.

Meanwhile, core inflation, which discounts more volatile items such as food and fuel rose 4% year on year, down from 4.1% and below estimates.

Delving deeper into the figures, the cost of goods retreated while services inflation slowed.

The weaker-than-expected inflation print fueled bets in the market that the Federal Reserve is done hiking interest rates.

Recently, several Fed policymakers have signalled that they may be done raising interest rates, although Federal Reserve chair Jerome Powell has repeatedly highlighted that the central bank could raise hikes again if needed.