- Indian Rupee (INR) rises after two days of losses
- Oil falls below $100 per barrel
- The US Dollar (USD) is falling versus its major peers
- US PPI inflation rose 0.5% MoM vs 1.2% expected
The US dollar-to-Indian rupee (USD/INR) exchange rate is falling after two days of gains. The pair rose 0.15% in the previous day, settling on Monday at 93.23. At 16:30 UTC on Tuesday, the pair is down -0.16% to 93.08 and trades between 93.03 and 93.40
The Indian rupee is strengthening as oil prices fall and market sentiment improves, with investors increasingly hopeful of a diplomatic breakthrough in the Middle East.
Despite the U.S. Navy maintaining a blockade of Iranian ports, oil prices have dropped back below $100 per barrel as markets anticipate that the U.S. and Iran could reach a resolution and potentially resume talks in Islamabad later this week.
Lower energy prices are particularly important for India, which imports around 90% of its energy needs, leaving the economy highly exposed to volatility in global oil markets.
On the data front, India’s retail inflation rose modestly to 3.4% year-on-year in March, raising concerns that a prolonged conflict in the Middle East, combined with weaker monsoon conditions, could push up living costs in the coming months. India is expected to see below-average monsoon rainfall for the first time in years, increasing risks to agricultural output.
The US dollar is falling across the board. The US Dollar Index, which measures the currency against a basket of major peers, is down 0.3% at 98.07, marking the seventh day of losses.
The U.S. dollar is falling for a seventh straight session, marking its longest losing streak since December. The decline reflects a combination of safe-haven outflows, easing energy prices, and expectations that the Federal Reserve may keep interest rates unchanged this year.
U.S. PPI data came in weaker than expected, rising just 0.5% month-on-month, in line with February and well below the 1.2% forecast. On an annual basis, wholesale inflation rose to 4.0% from 3.4%, but still fell short of expectations of 4.6%.
Investors will remain focused on developments in the Middle East, alongside speeches from several Federal Reserve officials later today.
