- Indian Rupee (INR) rises after losses yesterday
- CPI rose to 2.75% YoY in the RBI’s 2%-6% target band
- The US Dollar (USD) is rising versus major peers
- US stocks fell sharply in risk off trade
The US dollar-to-Indian rupee (USD/INR) exchange rate is falling, giving back yesterday’s gains. The pair rose 0.16% in the previous session, settling on Wednesday at 90.73. At 18:30 UTC on Thursday, the pair is down -0.20% to 90.55.
The Indian rupee rose on Thursday after hotter-than-expected inflation data and despite weak risk sentiment across the broader market.
Indian inflation accelerated to 2.75% in January in the first print of a revised data series. This returns inflation to the central bank’s 2%-6% target band for the first time since August.
The central bank raised its inflation projection for the current financial year to 2.1% from 2%. Annual inflation in December under the old series was 1.33%
The new series aims to capture changing consumption patterns by revising weightings and updating the base year to 2024.
The most notable change was a reduction in the food weighting to 37% from 46%.
The US Dollar is depreciating against the Rupee but appreciating against its major peers. The US Dollar Index, which measures the US dollar against a basket of major currencies, is up 0.1% to 96.93, after modest gains yesterday.
The US dollar is rising against its major peers on safe-haven flows amid a steep sell-off in US equities.
US indices are down over 1.5%, with fresh pressure from the tech sector and as markets continue to weigh the prospect of a more hawkish Federal Reserve.
Industries with exposure to AI that are expected to be disrupted are under pressure, particularly software firms and mega-cap tech companies that are investing heavily in AI.
Meanwhile, on the data front, US jobless claims fell by 5,000 to 227,000 in the last week, slightly above the 223,000 forecast. The data also comes after yesterday’s stronger-than-expected nonfarm payrolls report, which has led the market to lower expectations for a Fed rate cut.
