- Indian Rupee (INR) falls for a second day
- India’s wholesale inflation rises 1.26% in April
- US Dollar (USD) falls versus its major peers
- Fed Chair Powell warned of a delay to rate cuts
The US Dollar Indian Rupee (USD/INR) exchange rate is falling for a second day. The pair -0.06% in the previous session, settling on Monday at 83.50. At 19:00 UTC, USD/INR trades -0.02% at 83.49 and trades in a range of 83.48 to 83.56.
The Indian rupee is holding steady as investors digest the latest wholesale inflation data. Government figures showed that wholesale price-based inflation rose 1.26% in April at its highest pace in a year, mainly driven by food and primary materials.
The figures were higher than the 1% increase forecast by economists and were also up from 0.53 year on year in March.
Food prices rose by 5.52% annually compared to an increase of 4.65% in March, while primary materials were up 5% compared to a rise of 4.51% in the previous month.
Higher crude oil prices also drove inflation, which could quicken further in May amid a pickup in global commodity prices.
The US Dollar is falling across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at -0.18% at the time of writing at 105.04, falling for a second day.
The US dollar is falling despite hotter-than-expected US producer price inflation and as the market digests comments by Federal Reserve chair Jerome Powell ahead of tomorrow’s inflation data.
The producer price index rose 0.5% month over month in April, higher than the 0.3% forecast and up from -0.1 % in March. Meanwhile, on an annual basis, the PPI was 2.2%, up from 2.1%.
The data comes ahead of tomorrow’s U.S. consumer price inflation, which investors will be watching inflation data closely to assess when the Fed may be able to start cutting interest rates.
Meanwhile, Federal Reserve chair Jerome Powell urged the market to be patient. The Federal Reserve will likely keep rates high for longer. Powell echoed comments made earlier in the month. The market was relieved that his comments were more hawkish, which could be what sent the US dollar lower.
In addition to inflation data, the market will be watching retail sales figures, which are expected to show that sales rose by 0.4% month over month in April after rising 0.7% in March. Strong retail sales could raise concerns over inflation.
