- Indian Rupee (INR) fell after a modest rise yesterday
- Indian CPI to a 14-month high
- US Dollar (USD) rises to a 4-month high versus major peers
- Trump trade boosts the USD ahead of inflation data
The US Dollar Indian Rupee (USD/INR) exchange rate is rising after modest losses yesterday The pair fell 0.02% in the previous session, settling on Monday at 84.37. Today, at 20:00 UTC, USD/INR is rising 0.07% at 84.48 and traded in a range of 84.36 to 84.48..
The Indian Rupee is falling against the U.S. dollar despite Indian inflation rising by more than expected, pushing back RBI rate cut bets.
Inflation rose to 6.2% up from 5.49% in September. This was also ahead of expectations of 5.9%
One of the main causes of the rise in inflation was surging food prices. Food inflation was once again above 10%, with vegetables notably more expensive,
Hot inflation means the RBI is less likely to start cutting interest rates anytime soon, especially given that CPI is above the RBI’s 2% to 6% target band.
The US Dollar is rising across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, is rising 037%, trading at 105.94. This marks a third straight day of gains as the Trump Trade continues.
Expectations that Trump’s tax cuts and trade tariffs will add inflationary pressures to the US economy have lifted treasury yields higher. The U.S. dollar is tracking yields northwards.
The market is lowering expectations for Fed rate hikes and is now pricing in a 69% probability of a rate cut in December, down from 80% a week earlier.
The market is also pricing in fewer rate cuts in 2025. As a result, has the US dollar pushed up to five-month highs versus its major peers.
Attention is now turning to US inflation data which is due tomorrow at 13:30 GMT and is expected to tick higher to 2.6% up from 2.4%? Core inflation is also expected to remain sticky at 3.3%.
Hotter-than-expected inflation could see the market reining rate cut expectations, further helping to support the USD.