- Indian Rupee (INR) falls after a flat week last week
- Indian inflation falls to 1,54%
- US Dollar (USD) rises versus major peers
- USD recovers after Trump eases stance towards China
The US dollar-to-Indian rupee (USD/INR) exchange rate is falling after a flat week last week. The pair rose +0.02% in the previous week, settling on Friday at 88.75. At 21:30 UTC, USD/INR trades -0.10% higher at 88.66 and trades in a range of 88.61 to 88.75.
The US Dollar is rising against its major peers. The US Dollar Index, which measures the greenback against a basket of major currencies, is trading up 0.27% at 99.25, adding to last week’s gains.
The US dollar extended gains on Monday after President Donald Trump cooled trade tensions with China.
The USD strengthened against safe havens such as the Swiss franc and Japanese yen, rebounding from Friday’s session when Trump threatened to impose tariffs of 100% on China.
Yet after announcing the tariffs on Friday, Trump said on Sunday Don’t worry about China, it’ll be fine. His comment suggested that any trade tensions had calmed considerably.
Trump is on track to meet Chinese leader Xi Jinping in South Korea in late October ahead of the November 10 tariff pause deadline.
Meanwhile, the US government remains in shutdown mode, resulting in limited U.S. economic data this week. Instead, the focus will be on a speech by Federal Reserve Chair Jerome Powell tomorrow.
The Indian Rupee is under pressure as data showed that retail inflation in the region slowed to an 8-year low of 1.54% in November amid cooling food prices, leaving room for the central bank to cut rates once more when it meets in December.
Retail inflation came in below expectations of 1.7% and marked the lowest level since June 2017, when it was 1.46%.
The figure is also below the Reserve Bank of India’s 2% to 6% tolerance band for a second time in three months at after falling below 2% in July.
The RBI is mandated not to let inflation overshoot at tolerant range of 2% to 6% for more than three quarters in a row.
The RBI is expected to cut rates by 25 basis points in December. The RBI has cut rates by 100 basis points so far this year left rates unchanged at 5.5% in the October meeting but signalled scope for further rate cuts by December.
