- Indian Rupee (INR) is rising after 2 days of losses
- Oil prices fall should help inflation
- US Dollar (USD) falls versus major peers
- FOMC minutes are due
The US Dollar Indian Rupee (USD/INR) exchange rate is falling after two days of gains. The pair rose +0.09% in the previous session, settling on Monday at 83.31. At 16:00 UTC, USD/INR trades -0.06% at 83.26 and trades in a range of 83.23 to 83.37.
The Indian Rupee is rising even as the market mood turns cautious ahead of this evening’s Federal Reserve meeting minutes. As risk appetite cools, riskier your assets, such as equities and some currencies, are falling lower.
Oil prices, which fell for a fourth straight week last week, will help India control its inflationary pressures going forward, according to the central bank.
The comments come as Indian retail inflation eased to four-month to 4.87% in October as it moves closer to the central bank’s 4% target.
The US Dollar is falling across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades -0.09% at the time of writing at 103.35, after falling 0.45% yesterday.
The US dollar is for Lang extending losses from the previous session as investors wait cautiously for the minutes of the November FOMC meeting.
The market will be scrutinizing the minutes closely for clues over where the Fed is likely to go with monetary policy,
At the press conference for the November Fed meeting, Federal Reserve Jerome Powell suggested that the Fed would move forward carefully with rate hikes, but he also acknowledged the high treasury yields, which were tightening financial conditions.
Since the meeting, treasury yields have fallen, as has inflation, which cooled by more than expected to 3.2% year on year in October.
The market is not expecting the Federal Reserve to raise interest rates again this year and has indeed started to price in a rate cut potentially as soon as Q2 next year.
The minutes could provide further insight into the discussions that the Fed had and, therefore the likelihood of the Fed hiking rates again or whether the US central bank is thinking about when to cut interest rates. A hawkish-sounding Fed could boost the US dollar.
