- Indian Rupee (INR) is falling after gains this week
- Indian food inflation remains high
- US Dollar (USD) rises after better-than-expected retail sales
- US PPI eased by the most in 3 years
The US Dollar Indian Rupee (USD/INR) exchange rate is rising after three days of losses. The pair fell -0.19% in the previous session, settling on Tuesday at 83.02. At 15:00 UTC, USD/INR trades +0.18% at 83.17 and trades in a range of 82.94 to 83.20.
The Indian rupee is falling after several days of gains, thanks partly to the weaker U S dollar earlier this week.
Weak US inflation data sent Indian domestic equities to a nearly one-month high. The Nifty 50 settled 1.19% higher and the Sensex rose 1.14%. The Nifty 50 is looking at its best daily performance since March 31 after US inflation cooled to 3.2%.
Meanwhile, food inflation in India remains above authorities’ comfort level despite retail inflation cooling in October.
Indian retail inflation cooled in October to a four-month low of 4.87%, moving closer to the central bank’s 4% target level, which it said needs to be insight before it will consider lowering interest rates. However, food inflation, which makes up over half of the inflation basket, remained unchanged at 6.2%,
The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades +0.34% at the time of writing at 104.42, after falling -1.5% yesterday.
The US dollar is rebounding on Wednesday as investors weigh up stronger-than-expected retail sales and a further easing in wholesale inflation.
The producer price index, which measures inflation at the factory gate, fell by more than expected, dropping 0.5% month on month in October, below the 0.1% increase in inflation that economists had penciled in. This was also down from the 0.4% inflation seen in September.
This marks the largest decline in PPI since April 2020 and bodes well for consumer price inflation falling further.
However, the market was more focused on US retail sales, which came in better than expected. Retail sales in the US fell by -0.1% month on month in October after rising an upwardly revised 0.9% in September. However, this was much better than the 0.3% decline forecast.
This marked the first time in seven months that US retail sales fell, but the underlying measures of spending still suggest that the American consumer remains in reasonable economic health.