Today, the rupee made a huge recovery after a significant jump. Despite the fact that there is still substantial inflation, this is a major success. This fiscal year, the Reserve Bank of India (RBI) has raised the repo rate by 140 basis points.
The rupee was trading at 79.12 versus the US dollar in the interbank foreign currency market, down from 79.52 from the previous trading session. After the dollar dropped and inline CPI figures were released, the rupee appreciated (retail inflation data).
the reasons the rupee grew
The pressure on the dollar has decreased, according to Jatin Trivedi, VP Research Analyst at LKP Securities, in light of this evening’s release of US inflation statistics. 8.1 percent is the new projection for US inflation, which was previously predicted to stay at 8.5 percent.
These numbers are causing the dollar to decline. The Fed will feel less pressure if inflation declines. Additionally, this will reduce the demand for dollars. Earlier, it was predicted that the Fed will raise interest rates by 0.75 basis points, but if inflation falls, the rise will only be 0.50 or 0.25 bps.
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What is the dollar index doing?
The dollar index, which measures the strength of the dollar against six other currencies, decreased by 0.26%. As of the time this story was being written, the Sensex was up 470.64 points, or 0.78 percent, at 60,585.77, and the Nifty was up 137.95 points, or 0.77 percent, at 18,074.30 on the domestic equity market.
Due to the increase in food costs, the Consumer Price Index (CPI) increased from 6.71 percent in July to 7% in August. The inflation rate has above the central bank’s tolerance limit of 6% for the eighth month running. The government has instructed the RBI to keep retail inflation between 2 and 4 percent for a five-year period ending in March 2026.