- Indian Rupee (INR) rises after two days of losses
- Foreign investors return to Indian equities
- The US Dollar (USD) is rising versus major peers
- US retail sales were flat in December
The US dollar-to-Indian rupee (USD/INR) exchange rate is falling after two days of gains. The pair rose 0.18% in the previous session, settling on Monday at 90.75. At 18:30 UTC on Tuesday, the pair is down -0.26% to 90.53.
The Indian rupee is gaining against the US dollar as Indian equities also climbed for a third straight session, boosted by signs of a recovery in foreign portfolio inflows following a trade agreement with the US.
Foreign investors purchased Indian shares worth ₹22.55 billion on Monday and have bought $1.7 billion in Indian equities so far in February, after three consecutive months of selling. This is offering support to the Indian rupee
On the data front, attention is turning to India’s January consumer inflation rate, which is expected to rise for the third consecutive month to 2.4%. The rise comes amid firming food prices and higher gold and silver prices. January will be the first month of a new data series based on 2024 prices and is expected to mark the first time since August that inflation returns to the Reserve Bank of India’s 2% to 6% target.
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 0.07% to 96.89, after two days of losses.
The U.S. dollar is modestly higher as investors shrug off weaker-than-expected retail sales data, which raises concerns about the health of the consumer sector.
US retail sales unexpectedly came in unchanged in December at 0%, compared with the month before, reflecting a deeper-than-anticipated slowdown. Retail sales were expected to ease to 0.4% month-on-month in December, down from 0.6% in November.
Personal consumption is a major engine of the American economy, accounting for more than 2/3 of total output. In the third quarter, it contributed to as much as 4.4% annualised growth in US GDP. Therefore, any slowdown in retail sales is noted and important.
Attention now turns to tomorrow’s delayed US nonfarm payrolls and Friday’s CPI data.
