USDINR breaks higher after Indian inflation jumpIndian appeared to have been having success in driving down inflation of late, with CPI falling back from over 7% to 4.8% in the past year. However, the 7.4% retail inflation rate announced today provides a dramatic shift to the landscape, marking the highest rate in 15-years. That has been largely attributed to food prices, which is so heavily weighted that it accounts for nearly half of the overall CPI figure. With that in mind, the whopping 11.51% food inflation rate seen in June managed to drive a similar surge in the headline figure.
For markets, this has seen the rupee weaken, with USDINR rising up towards resistance at 83.28. Coming off the back of a prolonged period of consolidation, it looks likely that we are set for a potential upside breakout. With that in mind, a move through 83.28 resistance would signal a possible impending surge for the pair. To the downside a move below 83.60 would be required to negate that bullish view.
