indian-rupee-bank-notes - INR
  • Indian Rupee (INR) falls after gains yesterday
  • China inflation cools to 0.2% annually from 0.3%
  • US Dollar (USD) is falling against its major peers
  • US CPI inflation data tomorrow

The US Dollar Indian Rupee (USD/INR) exchange rate is rising after losses in the previous session. The pair fell -0.04% yesterday, settling on Tuesday at 83.46. At 20:00 UTC, USD/INR trades 0.07% at 83.52 and is in a range of 83.47 to 83.53.

The Indian Rupee is modestly lower as investors digest weaker-than-expected Chinese inflation figures. Data revealed that Chinese inflation unexpectedly slowed in June, according to figures from the National Bureau of Statistics, adding to concern that consumer demand remains weak, slowing the economic recovery of China, India’s largest trading partner.

Chinese inflation, as measured by the consumer price index, rose +0.2% after holding steady at 0.3% for the preceding two months. Economists a slight acceleration in price growth to 0.4%.

Meanwhile, headline inflation eased for a 20th straight month, falling 0.8% in June.

Currencies across Asia struggled.

The US Dollar is rising against the Rupee but falling versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades -0.04% at the time of writing at 105.08, after gains in the previous session.

USD is inching lower after modest gains in the previous session as the market continues to digest the Federal Reserve’s decision and Powell’s testimony before the Senate.

The head of the US central bank buoyed expectations for rate cuts as he hinted that the stage is almost set for lowering interest rates from the 22-year high. Powell pointed to cooling inflation and a cooling jobs market. Powell added that keeping rates high for too long could weaken the economy. However, he also said that more evidence was needed for policymakers to be confident of cutting interest rates.

A key test will come tomorrow with US inflation data, which is expected to show that consumer prices eased to 3.1% year on year, down from 3.3%.

Cooler-than-expected inflation wells could cement the likelihood of a Fed policy shift in September. The market is pricing in around a 75% probability of the Federal Reserve cutting interest rates in the September meeting, up from around 45% about a month ago.