- Indian Rupee (INR) rises after two days of losses
- India inflation fell to a 6-year low
- US Dollar (USD) falls versus major peers
- US inflation cooled to 2.3% in April
The US dollar-to-Indian rupee (USD/INR) exchange rate is rising on Tuesday after two days of decline. The pair fell 0.6% in the previous session settling on Monday at 84.88. At 22:30 UTC USD/INR trades 0.19% lower at 85.04 and traded in a range of 84.60 to 85.45.
The Indian rupee is rising as relations with Pakistan improved, despite India’s inflation cooling to its lowest level in nearly six years.
India’s retail inflation remained below the Reserve Bank of India’s 4% target for a third straight month as food prices rose at a slower pace, paving the way for more rate cuts from the central bank.
Annual retail inflation was 3.16% in April, down from 3.34% in March, taking it to a level last seen in July 2019. Economists had expected it to decline to 3.27%.
Food inflation accounts for almost 50% of the consumption basket, at 1.78% from 2.69% in March.
The US Dollar fell across the board on Tuesday. The US Dollar Index, which measures the greenback against a basket of major currencies, fell 0.38% to 100.95, giving back some of yesterday’s strong gains.
The USD is falling after weaker-than-expected US inflation data, and more trade deals are announced with Saudi Arabia.
Data showed that inflation, measured by the consumer price index, unexpectedly fell to 2.3% year on year in April, down from 2.4% in March. This was below the 2.4% that was expected. It marked the third straight month that inflation cooled by more than expected. Core inflation also eased to 2.8%, down from 3%.
The data suggests that the impact of liberation day tariffs and the escalating trade war with China in April had little impact on inflation. However, the effects of rising prices may be seen in the coming months.
Separately, the US dollar was falling despite $600 billion in trade agreements with Saudi Arabia.
