Softer US CPI data for June reduces expectations for Federal Reserve rate hikes, weakening the USD and lifting the INR to near 96.11.
The Indian Rupee strengthened against the US Dollar on Wednesday, extending gains from the past three sessions. The USD/INR pair fell to near 96.11 as traders scaled back bets on Federal Reserve rate hikes following weaker-than-expected US inflation data for June.
US Consumer Price Index (CPI) data showed headline inflation cooled to 3.5% year-on-year in June, down from 4.2% in May. Core CPI, excluding food and energy, rose 2.6% year-on-year, below the 2.8% estimate and prior 2.9% reading. The US Dollar Index (DXY) dropped 0.15% to near 100.80.
Market expectations for a Fed rate hike this month fell to 16.6%, down from 41.7% on Monday, according to the CME FedWatch tool. Fed Chair Kevin Warsh reiterated the central bank’s commitment to price stability in congressional testimony.