• Indian Rupee (INR) rises after 2-days of losses
  • RBI Governor Das supports a disinflationary policy stance
  • U.S. Dollar (USD) falls versus major peers
  • U.S. jobless claims are due shortly

The U.S. Dollar Indian Rupee (USD/INR) exchange rate is falling after two days of gains. The pair rose 0.12% in the previous session, settling on Wednesday at 83.18. At 12:00 UTC, USD/INR trades -0.05% at 83.14 and trades in a range of 83.05 to 83.23.

The Indian Rupee is edging higher after Reserve Bank of India governor Shaktikanta Das said at the World Economic Forum in Davos, Switzerland, that Indian monetary policy should remain disinflationary despite a sharp fall in core inflation.

Das added that while inflation is above 5.5% and close to 6%, it would be premature to consider cutting interest rates. However, he acknowledged that monetary policy appears to be working as core inflation falls closer to the target.

However, the RBI chief warned that the central bank remains cautious as geopolitical tensions could impact economies worldwide. He noted that food and inflation were particularly vulnerable to spikes amid the disruption of global supply chains.

The U.S. Dollar is falling across the board. The U.S. Dollar Index, which measures the greenback versus a basket of major currencies, trades -0.19% at the time of writing at 103.25, snapping a two-day winning run.

The U.S. dollar rally pauses for breath, but the greenback continues to trade around a monthly high versus its major peers.

The U.S. dollar has been pushed northwards as investors lower Federal Reserve rate cut expectations.

Traders have trimmed the likelihood of the first federal rate cut by March to just 61%, down from 65% on Tuesday and 85% at the end of December.

The market still expects around 145 basis points of cuts across 2024, even after Governor Christopher Waller pushed back against the need for aggressive monetary policy loosening.

Yesterday, U.S. retail sales data highlighted the resilience of the U.S. economy, rising 0.6% month on month ahead of the 0.4% that analysts expected.

Looking ahead, U.S. data and Federal Reserve speakers will remain in focus with U.S. housing starts building permits and jobless claims due to be released. Meanwhile, Atlanta Fed president Raphael Bostic is also on the calendar to speak twice across the U.S. session.