USD/INR: Rupee licks wounds near 74.60 as India’s inflation likely 5%-7% over next six months

Dhwani Mehta FXStreet

India’s retail inflation rate is likely to stay elevated between 5% and 7% through the next six months, Pronab Sen, Chairman of India’s Economic Statistics Panel, said on Wednesday.

Key quotes

“As long as the wholesale price index inflation is high, it means the costs of inputs are rising.”

“Sooner or later, this is going to get passed on, else the manufacturers of finished goods will be taking a huge hit on the margins.”

“The current wave will not impact the government revenue as it affects the unorganized sector more.”

“So, the GDP impact could be fairly small as the impact of Omicron is likely to be over by March.”

Market reaction

Despite the discouraging comments on inflation, the Indian rupee retreats from three-week lows against the US dollar.

The spot is now trading at 74.60, almost unchanged on the day, having spiked to three-week highs of 74.88 on aggressive Fed rate hike calls for March.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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