Rupee Vs Dollar: Rupee Rises Sharply Against US Dollar, Achieved One-month High
These figures are giving a negative rally to the dollar. Lowering inflation will ease pressure on the Fed. This will also weaken the demand for the dollar.
The Indian rupee rose by 40 paise to 79.12 against the US dollar in early trade on Tuesday, following a fall in the dollar and an increase in foreign investment inflows. This is the strongest level of the rupee in the last month.
In the interbank foreign exchange market, the rupee was trading at 79.12 against the US dollar, as against 79.52 in the previous trading session. The rupee strengthened after the dollar weakened and the release of inline CPI data (retail inflation data).
why rupee strengthened
Jatin Trivedi, VP Research Analyst, LKP Securities, said the pressure on the dollar has eased in view of the US inflation data to be released this evening. Inflation in the US is expected to come down to 8.1 percent, while it was earlier expected to remain at 8.5 percent.
These figures are giving a negative rally to the dollar. Lowering inflation will ease pressure on the Fed. This will also weaken the demand for the dollar. Earlier it was speculated that the Fed may increase its rates by 0.75 bps, but if inflation declines then this increase will be only 0.50 or 0.25.
How is the dollar index
The dollar index, which gauges the greenback's strength against six currencies, fell 0.26 percent. In the domestic equity market, the Sensex was trading up 470.64 points or 0.78 percent at 60,585.77 and the Nifty was trading 137.95 points or 0.77 percent higher at 18,074.30 as of writing the news.
The Consumer Price Index (CPI) rose to 7 percent in August, from 6.71 percent in July, due to the rise in food prices. This is the eighth consecutive month that inflation has remained above the central bank's maximum tolerance band of 6 percent. The government has mandated the RBI to maintain retail inflation in the range of 2 to 4 percent for a period of five years ending March 2026.