Rupee Falls as Dovish Shift in US Rate Expectations Weighs on Indian Economy

The Indian Rupee (INR) has fallen against the US Dollar (USD), as the USD/INR pair rose to near 95.44 after a corrective move the previous day.

The rise in the US Dollar is attributed to easing fears of a near-term Federal Reserve (Fed) interest rate hike, following the expected slowdown in the United States (US) Consumer Price Index (CPI) growth in July.

Analysts at Brown Brothers Harriman noted that the latest US inflation data prompted a modest dovish shift in rate expectations, with Fed funds futures trimming bets of a September rate hike to 35% from roughly 50% after the US July CPI print signaled inflation is cooling.