Rupee gains as India CPI cools to 8-year low; opens at 87.65/$

Indian Rupee today: The domestic currency opened 6 paise stronger at 87.65 against the dollar on Wednesday

Indian Rupee advanced on Wednesday after the domestic retail inflation cooled to an eight-year low of 1.55 per cent in July. 

 

The domestic currency opened 6 paise stronger at 87.65 against the dollar on Wednesday, according to Bloomberg. The rupee has depreciated by 2.5 per cent in the current financial year, whereas it has witnessed 2.3 per cent depreciation in the current calendar year.

 

The last time the Consumer Price Index (CPI) had been this benign was in June 2017, when it recorded a 1.46 per cent uptick. The decline in retail inflation was aided by a deepening deflation in several food items. Data showed that food inflation, which had turned negative in June, declined by another 1.8 per cent in July.  Core inflation which excludes volatile segments such as food and energy, declined to 4.1 per cent during the month.

 

Analysts expect consumer demand to pick up in light of the mild inflation trend, and reckon that monetary policy actions will hinge on the trajectory and outlook for prices and economic growth. The Reserve Bank of India (RBI) last week pegged the average price rise pace for 2025-26 (FY26) at 3.1 per cent from 3.7 per cent.  

 

Meanwhile, in the US, the core CPI, which excludes food and energy costs, climbed 0.3 per cent in July, the fastest pace since the start of the year, driven mainly by higher services prices. Traders upped their bets that the Federal Reserve could cut interest rates in September. 

 

The dollar index, a measure of the greenback against a basket of six major currencies, was down 0.05 per cent at 98.04.

 

Foreign portfolio investors (FPIs) have been pulling out, keeping the dollar well bid, with further rupee weakness likely to accelerate outflows. Global funds have been net sellers of ₹16,062 crore so far this month. 

 

In commodities, crude oil prices declined ahead of the crude oil inventory figures due Wednesday as investors weighed the meeting between US President Donald Trump and his Russian counterpart Vladimir Putin later this week. Any ceasefire could be positive for India, as the additional 25 per cent tariff Trump levied on Russian oil purchases would be void.

 

Brent crude price was down 0.05 per cent at 66.09 per barrel, while WTI crude prices were lower by 0.16 per cent at 63.07, as of 9:12 AM IST.