- Indian Rupee (INR) is falling for a second day
- Indian inflation fell to an 8-year low
- US Dollar (USD) is falling versus major peers
- Scott Bessent said the Fed should cut by 50 bps
The US dollar-to-Indian rupee (USD/INR) exchange rate is falling for a second straight day on Wednesday. The pair fell -0.07% in the previous session, settling on Tuesday at 87.59. At 21:30 UTC, USD/INR trades 0.17% lower at 87.44 and traded in a range of 87.35 to 87.70.
The Indian Rupee gained amid U.S. dollar weakness and as data showed that retail inflation in India slowed to its lowest level in eight years. Indian retail inflation rate fell to its lowest level since 2017 owing to lower food prices, especially vegetables and pulses.
Annual retail inflation fell to 1.55% in July compared to 2.1% in June. This was below economists’ expectations of 1.76% and below the RBI’s tolerance band of 2 to 6% for the first time since January 2019.
The data is unlikely to trigger an immediate rate cut as policymakers could consider the decline as temporary, indifferent to volatile food prices.
The US Dollar is falling across the board. The US Dollar Index, which measures the greenback against a basket of major currencies, is falling 0.32% to 97.79, marking a second day of losses.
The USD is falling on speculation that the Federal Reserve could turn more dovish following remarks by U.S. Treasury Secretary Scott Bessent.
U.S. Treasury Secretary Scott Bessent said the Fed should reduce borrowing costs by 50 basis points at the September meeting owing to the weakness in the labour market. In the interview with Bloomberg, he added that rates should be 150 to 170 basis points lower.
The market is pricing in a 94% chance of a 25 basis point cut with a 6% chance for a 50 basis point reduction at this September 1617 meeting.
Data yesterday showed that the US inflation was unchanged at 2.7% year on year, below expectations of 2.8% meanwhile, core CPI rose labour forecasts are 3% three-point 1% annually, up from 2.9% in June.