15 May 2023

INR Weakens, USD Gains Amid Cooling Inflation and Job Market

INR weakened on declining Indian retail inflation. USD gained despite cooling inflation and job market. US consumer price index eased to 4.9%, below forecasts. Consumer sentiment in the US dropped. Fed raised rates recently.

author dp
Team INRBonds
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  • INR fell against USD after data showed that retail inflation cooled to 4.7% year on year in April, reaching an 18-month low and well below the Reserve Bank of India’s upper tolerance band for a second straight month.
  • Inflation cooled from 5.66% in April to 4.7%. Food inflation, which has been a major contributor to higher prices, fell to its lowest level since November 2021.
  • USD traded higher despite data showing that inflation and the US jobs market cooled.
  • The US consumer price index for April eased to 4.9%, the lowest annual reading since April 2021 and slightly below the expectations of 5%. The CPI rose 0.4% month on month in April, up from 0.1% in March.
  • The U.S. Michigan consumer sentiment index fell to 57.7 in May, down from April’s 63.5, its lowest level this year, amid renewed concerns of a recession.
  • The data comes after the Federal Reserve raised interest rates by 25 basis points last week and hinted that it may consider pausing rate hikes in the June meeting.

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