Rupee Down, Reserve Bank of India Sets to Cut Rates

The Indian rupee falls against other forex players such as the US dollar in today’s trading. Aside from that, the Indian retail inflation rate is expected to exceed the forecasts of the Reserve Bank of India.

First, the rupee vs. dollar pairing. The USD to INR exchange rate went up by 0.25% or 0.176 points this Friday’s trading.

The USDINR pair currently trades for ₹71.220, climbing up from its last close of ₹71.044. It also extended its range from ₹71.047 to ₹71.332 in forex sessions.

Meanwhile, the CNY to INR exchange pair went even higher as it gained 0.52% or 0.0528. The CNYINR pair currently exchanges around ₹10.1968 in sessions.

The traders now expect a repo rate cut from the Reserve Bank of India in its December meeting.

Aside from the rupee’s fall, sovereign bonds and stocks also slipped as outlook growth concern looms.

In recent weeks, the rupee and Indian assets received support from the strong overseas inflow. That is after the positive results in the last quarter, which then boosted investors’ hopes.

However, it seems that tables have turned for the Indian rupee.

Inflation Concerns

Recently, it was found more experts believe that the country’s retail sales inflation will surpass the RBI’s goal. The initial target of the Reserve Bank of India for the medium-term inflation is 4% in October, the first time since July 2018.

The unexpected stimulus in retail inflation was mainly due to rising vegetable prices. Monsoons that pass by India, of course, made it difficult for local farmers.

Indian economists now expect the country’s inflation to hit 4.25% in the previous month, 0.25% higher than the RBI’s goal.

The experts also expect the Reserve Bank of India to continue its monetary easing road this year. That is to support the growth and week core inflation outlook.