USD/INR: The rupee shows resilience against a strong dollar
- Indian Rupee (INR) eases after strong gains yesterday
- Oil prices ease
- US dollar (USD) rises as peace talks break down
- US CPI rises 7.9%
The US dollar and Indian rupee (USD/INR) exchange rate rose on Thursday, ending a two-day losing streak. The pair settled -0.7% lower on Wednesday at 76.35. At 1630 UTC, USD/INR is trading +0.03% at 75.60. The pair is on track to gain 0.6% this week.
The Indian rupee is showing resilience against the US dollar, which comes as the Reserve Bank of India may feel pressure to tackle higher inflation sooner than it initially expected after the rise in world commodity prices.
Analysts at ratings agency S&P have said that if inflation rises above the 4-6% level for an extended period, the RBI will feel pressure to rise earlier. The agency predicts economic growth of 9.8% in the current fiscal year ending in March and could reach 7.8% growth in the next fiscal year.
Oil prices are falling again today, with West Texas Intermediate trading over 1.5% after posting 12% losses in the previous session.
The US dollar is up across the board. The US Dollar Index, which measures the greenback against a basket of major currencies, is trading +0.47% at the time of writing at 98.43 after heavy losses in the previous session.
The US Dollar fell sharply yesterday as risk sentiment picked up significantly. Riskier assets were in favor and the safe-haven US dollar was not in favor as investors grew bullish on a breakthrough in the Russia-Ukraine peace talks that took place today.
Unfortunately, market optimism was unwarranted and talks between Russian Foreign Minister Lavrov and his Ukrainian counterpart Kuleba failed to move towards a ceasefire in Ukraine. The news once again boosted demand for safe havens driving the US dollar higher.
Today, US inflation data was released and showed consumer prices jumped 7.9% year-on-year in February from 7.5% in January. The data comes as commodity prices rose across the board after Russia invaded Ukraine.