- Indian Rupee (INR) holds steady after losses yesterday
- Indian inflation is expected to rise
- US Dollar (USD) is falling against its major peers
- US CPI fell to 3% YoY
The US Dollar Indian Rupee (USD/INR) exchange rate is holding steady after gains in the previous session. The pair rose 0.05% yesterday, settling on Wednesday at 83.51. At 20:00 UTC, USD/INR trades -0.01% at 83.50 and is in a range of 83.47 to 83.59.
The Indian central bank has warned that retail inflation could be as close as 5% in June, up from 4.8% and still significantly ahead of the Reserve Bank of India’s 4% target level.
The central bank warned that it was still some distance from cutting interest rates and, at its June meeting, left its main interest rate unchanged for an eighth straight month, although two of the six policymakers had voted to reduce the rate.
Elsewhere, oil prices remained unchanged after rising in the previous session. Data from the International Energy Agency showed that US crude and gasoline inventories eased after the driving season ramped up. Higher oil prices are bad news for India, which imports 80% of its oil requirements.
The US Dollar is steady against the Rupee but falling versus its major peers. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades -0.66% at the time of writing at 104.39, marking the second day of losses.
The US dollar is falling sharply after US inflation data cooled by more than expected, fueling expectations that the Federal Reserve could cut interest rates in the coming months.
Inflation, as measured by the consumer price index, eased to 3% year over year, down from 3.3% in May and below the 3.1% expected. On a monthly basis, CPI fell -0.1%, defying expectations of a 0.1% increase.
Meanwhile, core inflation was also easing, falling to 3.3% From 3.4% in May.
The data come after Jerome Federal Reserve chair Jerome Powell said earlier in the week that he needs to see more good inflation data before he can confidently cut rates.
Following the data, the market has revised rate cut expectations and is now pricing in an 87% probability that the U.S. central bank will reduce interest rates by at least 25 basis points in the meeting on September 18th.
Meanwhile, jobless claims were slightly stronger than expected, falling to 220,000, down from an upwardly revised 239,000 the previous week.
