inr-bank-notes - INR
  • Indian Rupee (INR) falls with Asian peers
  • Indian domestic equities fall
  • US Dollar (USD) falls versus major peers
  • US inflation was hotter than expected

The US Dollar – Indian Rupee (USD/INR) exchange rate is rising for a second straight day. The pair rose 0.08% in the previous session, settling on Tuesday at 82.78. At 17:00 UTC, USD/INR trades +0.08% at 82.85 and trades in a range of 82.76 to 82.91.

The Rupee is falling amid weakness in most Asian currencies and an anticipated outflow of $2 billion, which has added pressure on the currency.

The outflows could be mitigated in March by foreign portfolio investment and repatriation inflows that usually occur in March.

A drop in domestic equities kept the Rupee out of favor. The Nifty 50 closed 906 points lower, with all sectors in the red.

The US Dollar is rising against the Rupee but falling against its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at -0.21% at the time of writing at 102.64 as it attempts to recover some of last week’s losses.

The U.S. dollar is falling as investors continue to weigh up yesterday’s hotter-than-expected inflation report.

Inflation, as measured by the consumer price index, rose by 0.4% month over month, up from 0.3% in January. The core reading was also hotter than expected, rising 0.4%, up from 0.3% the previous month.

On an annual basis, both core inflation, which strips out more volatile items such as food and fuel, and headline inflation were hotter than expected, highlighting the struggles that the Fed is facing to bring stick inflation back to its 2% target.

The data raises some questions about the Federal Reserve’s ability to cut interest rates three times this year, as indicated in the December Fed meeting’s dot plot. It also raises questions over whether the Federal Reserve will be able to cut interest rates in June.

However, the market is shrugging off these concerns, still firm in its belief that the Fed will cut rates in a few months.