The Indian rupee traded relatively flat against both the US dollar and the euro to kick off the trading week. The rupee has struggled to generate any momentum over the last month, particularly with the crippling COVID-19 public health crisis lingering in one of the world’s largest economies. What does the data say nowadays?
In May, the annual consumer inflation rate advanced to a six-month high of 6.3%, up from 4.23% in April. The market had penciled in a reading of 5.3%. The higher inflation figures were driven by crude oil, gold, apparel, and housing. The Reserve Bank of India (RBI) anticipates the average inflation rate to be 5.1% in the current financial year.
Last month, India’s Wholesale Price Index (WPI) change climbed by 12.94% year-over-year, representing the fifth consecutive monthly increase. This was also the highest wholesale inflation rate since December 1998. The WPI reported higher prices for manufacturing (10.83%), fuel (37.61%), and food (4.31%).
In other economic data, industrial production surged at an annualized rate of 134.4%, while manufacturing output soared 197.1% in April. Passenger vehicle sales declined 66.3% in May.
The RBI’s foreign exchange reserves clocked in at a fresh all-time high of $605.01 billion in the week ending June 4, up from $598.17 billion in the previous week. This was the ninth straight week that forex reserves have increased.
After peaking at approximately 400,000 confirmed cases of COVID-19 in May, new infections have collapsed. The seven-day rate (as of June 12) fell to 90,000. The government’s restrictions, assistance from the international community, and an extensive rollout of vaccines have been contributing factors in the significant decrease in cases.
In total, India has reported 29.5 million cases and a death toll of 374,000.
Will the dramatic resurgence in cases affect economic growth? The World Bank forecasts that the Indian economy will expand 8.3% in 201, although experts are revising their projections sharply lower in the aftermath of the COVID-19 wave.
The USD/INR currency pair rose 0.01% to 73.2368, from an opening of 73.2319, at 12:51 GMT on Monday. The EUR/INR edged up 0.09% to 88.75, from an opening of 88.67.