Rupee INR strengthens after RBI hawk stance, CPI in focus

While most Asian currencies fell on Friday amid continued concerns over China’s economic slowdown, the dollar rose after data showed US consumer spending rose sharply in July, as expected.

US Treasury bond yields also weighed on the local currency amid expectations that the Federal Reserve will keep interest rates higher for longer dollar holdings.

According to the data released on Thursday, US Consumer Price Index (CPI) inflation increased in July compared to the previous month, in line with expectations. While the data supports the bets that the Fed will keep interest rates steady in September, markets have also lowered their rate cut expectations this year and rates are expected to remain at the 22-year limit.
This weighed on most risk-focused stocks, with investors still cautious about buying Asian currencies amid a more positive outlook for US interest rates.

The yen was one of the worst performers, falling to a one-month low in nighttime trading and stabilizing around 145 on Friday. However, trading volume is limited due to the holiday market in the country.
The price-sensitive South Korean won fell 0.4%, while the Singapore dollar slipped slightly after Singapore cut its economic growth this year.

AUD was one of several gains for the day, up 0.2% as Reserve Bank Governor Philip Lowe warned that sticky inflation could prompt the central bank to raise interest rates.

The depressing inflation and print data released this week, fears of a drop in the stock market and new concerns about China also weighed on the mood in Asia.
Concerns over China’s real estate are not enough, but the PBOC is withdrawing one of China’s largest producers, Country Garden Holdings (HK:2007), due to the devastating economic downturn.

While the news came that the company wanted to restructure its debt, the developer said that he did not pay an amount of dollars.

Given that the real estate sector is the country’s main growth engine, a high-profile default bodes badly for China’s already troubled economy and could lead to a recession.

However, the yuan rose 0.2% on Friday, supported by moderate revisions from the People’s Bank of China (PBOC) this week.
Banks were also seen selling dollars for yuan. INR strengthens after RBI hawk stance, CPI in focus

RBI keeps rates steady but points to further policy tightening, INR is also one of the few stars to cap hyperinflation, up 0.2%.

The Reserve Bank of India warned that CPI inflation could rise in July, and index readings will take place on Friday.

RBI says that the increase in inflation will be temporary, it is ready to tighten further to prevent inflation from increasing further.

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