Finance
The Indian Rupee recorded its strongest gain in over a month on a weaker dollar, after domestic retail inflation eased to an eight-year low of 1.55 per cent in July.
According to Bloomberg, the native currency had its best session since July 3 on Wednesday, closing at 87.43 against the dollar, up 28 paise, or 0.32 percent. In the current year, the rupee has lost 2.13 percent of its value.
The currency traded strongly on optimism over possible positive developments in the Russia-Ukraine conflict, as US President Donald Trump and Russian President Putin are set to meet on August 15, Jateen Trivedi, VP research analyst – commodity and currency at LKP Securities, said. “Softer CPI data in both India and the US also aided sentiment. The rupee is expected to trade in a range of 87.25-88.00.”
India might benefit from any ceasefire agreement between Russia and Ukraine since it would nullify the additional 25% tax that Trump imposed on Russian oil sales.
In contrast, the Consumer Price Index (CPI) last experienced such a moderate increase of 1.46 percent in June 2017. A growing deflation in a number of food categories contributed to the drop in retail inflation. According to data, food inflation decreased by 1.8% in July after being negative in June.
During the month, core inflation—which does not include volatile sectors like food and energy—dropped to 4.1%.
Analysts believe that monetary policy actions will depend on the trajectory and outlook for prices and economic growth, and they anticipate that consumer demand will increase in light of the low inflation trend. The average rate of price increases for 2025–2026 (FY26) was set by the Reserve Bank of India (RBI) last week at 3.1%, down from 3.7%.
In the meantime, increased service prices were the primary driver of the US core CPI’s 0.3% July increase, which was the quickest since the year began. The core CPI does not include food and energy costs. In anticipation of a September interest rate cut by the Fed, traders increased their wagers.
During the month, core inflation—which does not include volatile sectors like food and energy—dropped to 4.1%.
Analysts believe that monetary policy actions will depend on the trajectory and outlook for prices and economic growth, and they anticipate that consumer demand will increase in light of the low inflation trend. The average rate of price increases for 2025–2026 (FY26) was set by the Reserve Bank of India (RBI) last week at 3.1%, down from 3.7%.
In the meantime, increased service prices were the primary driver of the US core CPI’s 0.3% July increase, which was the quickest since the year began. The core CPI does not include food and energy costs. In anticipation of a September interest rate cut by the Fed, traders increased their wagers.
Source: BS
