INR vs USD rate today: Rupee jumps the most against US dollar in a month

This was the best gain for rupee in a month, possibly helped by dollar inflows.

US consumer prices barely rose in November – just 0.1% – after advancing 0.4% in October. Economists had expected the reading at 0.3%. Traders will be closely watch Fed’s policy announcement tonight and chairperson Jerome Powell’s comments.  The Fed is widely expected to scale back its rate hike to 50 basis points (bps) later in the day. Since March, it has raised the rate by 375 bps, including four back-to-back hikes of 75 bps each.

The dollar index was down at 103.345 today. So far this year, the rupee is down about 11% against the US dollar. 

The US data comes after India’s retail inflation reading showed a moderation, rising 5.88% in November against a 6.77% increase in October. 

Similar to retail inflation, wholesale inflation data for India released today showed the reading fell to a 21-month low of 5.85%, down from 8.4% in October.

“With both WPI and CPI losing momentum, hopes of a pause from the RBI in coming meeting have likely risen. While we acknowledge that inflationary risks are receding, which could make the RBI more balanced in its inflation assessment, we are still tracking headline CPI around 6% in December, and momentum in core inflation staying somewhat sticky. Still, with CPI inflation returning within the target band, with international commodity prices down from their highs we expect headline inflation to fall further in the coming months. This should pave the path for the RBI to pause after delivering a final 25bp hike in February, which would take the repo rate to 6.50%,” Barclays said in a note. 

The RBI has raised the repo rate by 225 bps since May to control inflation, which stayed above its upper tolerance range for 10 months through October. (With Agency Inputs)