- Indian Rupee (INR) falls after to 86.70
- Indian inflation eased to 5.22% in December
- US Dollar (USD) rises against its major peers
- US NFP smashed expectations
The US Dollar Indian Rupee (USD/INR) exchange rate is rising on Monday as it heads into an eleventh straight week of gains. The pair rose 0.47% in the previous week, settling on Friday at 86.16. On Monday at 19:37 UTC, USD/INR trades +0.55% at 86.63 and trades in a range of 85.84 to 86.70.
The Rupee is falling on Monday after data showed that inflation cooled to a four-month low in December. This raises optimism that the central bank could cut rates in February.
Annual retail inflation eased to 5.22% in December from 5.48% in the previous month, this was lower than the 5.3% forecast.
Inflation in food items, which account for almost half of the consumption basket, was 8.39% in December, down from Furman’s .04% in November. While cereal prices rose modestly, vegetable prices continued to rise at a solid pace, gaining 26.5% year on year in December.
The Reserve Bank of India is expected to cut rates by 25 basis points in February.
The US Dollar is rising across the board. The US Dollar Index, which measures the greenback against a basket of major currencies, trades at +0.21%, trading at 109.88 on Monday, marking a fifth straight day of gains.
The US dollar extended gains on Monday following Friday’s blowout of U.S. jobs data, which highlighted the strength of the economy and cast doubt over the outlook for Federal Reserve rate cuts this year.
On Friday, the US nonfarm payrolls showed that 254k jobs were added to the economy in December, well ahead of the 164k forecast. The unemployment rate also unexpectedly fell to 4.1%, leaving traders heavily scaling back Fed rate cuts the expectations for this year.
The market is no longer Philly pricing in even one rate cut from the Fed in 2025, down from 225 basis point rate cuts priced at the start of the year.
