- Indian Rupee (INR) is falling after the RBI meeting
- The central bank moved its policy stance to neutral
- US Dollar (USD) rises versus its major peers
- Fed minutes supported the view of gradual rate cuts
The US Dollar Indian Rupee (USD/INR) exchange rate is rising after two days of losses. The pair fell -0.04% in the last week, settling on Tuesday at 83.94. Today, at 21:00 UTC USD/INR trades up 0.02% at 83.95 and traded in a range of 83.55 to 83.98.
The Indian rupee is falling after the Reserve Bank of India left interest rates unchanged but set the stage for its first rate cut in four years.
The RBI left rates at 6.5% in a five-to-one vote but opted to change its policy stance to neutral, signaling that the next likely move from the central bank would be a cut.
The RBI governor said that food costs, which make up around half of the consumer price basket, were expected to ease in the coming months, improving the outlook for inflation. The central bank expects inflation to cool within its 4% target, but it said it will remain data-dependent.
The RBI retained its growth and inflation forecasts until March 2025 at 7.2% and 4.5%, respectively.
The US Dollar is rising across the board on Friday. The US Dollar Index, which measures the greenback versus a basket of major currencies, rose 0.36% to trade at 102.66, marking the eighth day of gains.
The U.S. dollar is moving higher against its major peers after the minutes of the September meeting. The September minutes showed that the substantial majority of the Fed officials supported starting the rate-cutting cycle with an outsized 50 basis point cut.
However, there was an even border agreement that this outsized initial move would not commit the Fed to any particular pace for rate reductions going forward.
Attention will now turn to US CPI data, which they expected to show that inflation is 2.3%, down from 2.5% year on year.
Investors have scaled back expectations of aggressive Fed rate cuts after last week’s impressive nonfarm payroll report. Some are even pricing in the possibility that the Fed could leave rates unchanged in November.
