- Indian Rupee is losing traction due to modest US Dollar (USD) demand.
- The Indian Consumer Price Index (CPI) surged 5.55% YoY in November, up from 4.87% prior, with Food Inflation climbing to 8.70% from 6.61% prior.
- Market players are closely watching the Fed interest rate decision and the press conference.
The Indian Rupee (INR) is extending its downside amid modest US Dollar (USD) strength. Data released on Tuesday revealed that the Indian Consumer Price Index (CPI) came in higher than the Reserve Bank of India (RBI) target of 4.0%. Although headline inflation remained within its tolerance range of 2–6% for the third consecutive month, it has surpassed the medium-term target of 4% for the past 50 consecutive months.
Furthermore, the Consumer Food Price Index, which measures food inflation, increased by 8.70% in November from 6.61% the previous month. Last week, the RBI Monetary Policy Committee decided to keep the policy repo rate steady at 6.50%, and the MPC stated that they will closely monitor any indications of food price pressures.
Investors await the US Producer Price Index (PPI) on Wednesday ahead of the Federal Reserve (Fed) monetary policy meeting. The annual PPI figure is forecast to ease from 1.3% to 1.0% in November, while the PPI rate ex Food & Energy is expected to drop from 2.4% to 2.2% in the same period. The highlight will be the Fed interest rate decision, with no change expected. Nonetheless, investors will examine Fed Chair Jerome Powell’s comments after the meeting for fresh impetus.
Daily Digest Market Movers: Indian Rupee trades weaker amid higher inflation concern
- India’s Consumer Price Index (CPI) surged 5.55% YoY in November from 4.87% in October, according to the Ministry of Statistics & Programme Implementation.
- Indian Industrial Production for October reached a 16-month peak, rising by 11.7% compared to a 4.1% increase in the previous reading.
- Indian Manufacturing Output for October came in at 10.4% MoM versus 4.9% prior.
- The International Monetary Fund (IMF) stated that India’s economy will be one of the fastest-growing in the world over the next few years, estimating Real Gross Domestic Product (real GDP) to expand by more than 6.0% in both 2023 and 2024.
- According to the National Securities Depository, foreign investors allotted $3.7 billion in Indian equities and $800 million in debt over the six sessions in December.
- US inflation, as measured by the Consumer Price Index (CPI), climbed 0.1% MoM in November from 0% in October, while the annual CPI eased from 3.2% to 3.1% in November.
- The Core CPI, which excludes volatile food and energy prices, rose to 0.3% MoM from 0.1% in the previous month. On an annual basis, the Core CPI figure grew 4.0% YoY, matching expectations.
- The markets anticipate the Fed to maintain the benchmark overnight borrowing rate in a range between 5.25% and 5.50% at its December meeting.
Technical Analysis: Indian Rupee’s constructive stance remains unchanged
Indian Rupee trades on a softer note on the day.
