The Indian Rupee declined on Wednesday to close down by 12 paise at 85.94 against the US dollar as the greenback found additional strength, and the US Federal Reserve is less likely to reduce interest rates. The fall in the rupee happened following the release of new inflation data in the United States, which gave the impression that the Federal Reserve would take a less easy stance on the monetary policy in the near future.
Market analysts said the updated US core inflation data, which does not include unstable elements, such as food and energy, reflected a measly gain of only 0.2 percent in June over May. It was the fifth month in a row that turned out to be a weaker-than-anticipated inflation, but it was not sufficient to keep hopes of a steep rate reduction high. This gave strength to the US dollar, exerting pressure on the emerging market currencies such as the Indian Rupee.
The rupee has lost about 0.39 percent since the beginning of the calendar year. The dollar index that gauges the power of the greenback against a selection of six major global currencies rose briefly before losing some gains, slumping 0.08 percent to 98.53 by the end of Wednesday.
Trade policy-wise, US President Donald Trump has concluded a 19 % tariff agreement with Indonesia, with an upcoming deal with India evidently on its way. He has also said that there are chances of new tariffs being imposed within the month on pharmaceuticals. All these have led to increased uncertainty in the currency market.
On the commodity front, crude oil slightly dropped as traders evaluated the future demand of crude oil between the US and China. Brent crude was recording a fall of 0.23 percent or trading at 68.55 dollars per barrel, whereas WTI crude was falling by 0.30 percent with a price point of 66.32 dollars per barrel, as of 3:35 PM IST, which is portrayed by tepid sentiment amidst brightening economic indicators.
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