Today, the Indian rupee exhibited limited activity, relinquishing its recent strength in response to a significant surge in the US dollar, which breached the 105 mark. Indian Rupee currently stands at 83.37, witnessing an overall drop of 6 paise for the day; however just retracing its two-week ascent progress. On the previous day, the Dollar Index’s growth was on an upward toe due to the intensified consumer price inflation.
The Statistician’s Leran Bureau of Labor Broadcasted Data about the US Consumer Price Index CPI indices boosting consecutively 0.4% Over a 12-month span to March, which recorded a worst-case increase in the CPI at 3.5% year on year, being the biggest record in the last 6 months. The result starts to give a value of 3.9% and even exceeds the 3.2% reading in February. However, the minutes from the last Federal Reserve meeting reflected not only the input from some members of the Fed but also the idea that these inflationary spikes shouldn’t be dismissed as statistical fluctuation, for they can become permanent and widespread.
Not surprisingly, the USD index neared a five-month high at 105.20 and is now just around the level of 105. The fact that the US dollar is oversupplied has impeded the efforts of the Indian Rupee to gain ground. In addition to that, long-term optimism in crude oil prices, which tended to push the INR down, was also a factor that hung over the upside to the rupee.
The current economic realm denotes the balancing of the external and the local factors which determine the direction of the exchange currency. The results of the Indian Rupee can be shown by how volatile its performances are against external factors that are going on, such as the up and down of the US dollar and commodity prices, especially oil.
As investors focus on the consequences of this situation for monetary policy and economic stability, it is more likely that the question of return on investing will be raised. The Fed’s statement of considering the inflationary risks when it is elaborating the US economic statistics, as well as that it will keep a close eye on the economic data points that it will process is a hinting that the Fed is being slightly cautious about any policy shifts.
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