- Indian Rupee (INR) rises after losses last week
- Indian inflation rises to 1.33% YoY
- The US Dollar (USD) is falling versus major peers
- DoJ probes Fed Chair Powell raising concerns over Fed independence
The US dollar-to-Indian rupee (USD/INR) exchange rate is falling after gains last week. The pair rose -0.26% in the previous week, settling on Friday at 90.24. At 16:30 UTC on Wednesday, the pair is falling 0.19% at 90.07.
Indian inflation rose in December but remains below the Reserve Bank of India’s 2% to 6% target range, leaving room for the central bank to cut rates again at its February meeting.
CPI rose 1.33% from a year earlier, compared to expectations of 1.56%, and up from the reading of 0.71% in November.
The data shows that inflation remains benign, creating room for another rate reduction from the RBI in the February meeting, although the decision is expected be a close call.
The RBI cut rates to a three-year low in December and signaled that it could ease borrowing costs further.
The RBI expects inflation to stay below its 4% target until at least September.
The US Dollar is falling across the board. The US Dollar Index, which measures the US dollar against a basket of major currencies, is down 0.35% to 98.79, after solid gains last week.
The US dollar is falling on Monday, reversing last week’s gains, after the US Department of Justice announced an investigation into Federal Reserve chair Jerome Powell.
The investigation will focus on Powell’s $2.5 billion restoration of the Federal Reserve headquarters. However, Powell noted that this was a pretext to gain more influence over interest rates, which President Trump wants cut dramatically.
These developments raise concerns about the Federal Reserve’s independence and come as Trump is expected to replace Powell with a more dovish Fed chief when Powell’s term ends in May.
Trump is reportedly interviewing BlackRock’s chief bond investment manager, Rick Rader, this Thursday, according to Fox Business Network. Rieder is among the four finalists under consideration to succeed Powell.
