India Inflation Hits 3 Year Low

Inflation appears to have finally turned a corner in India, heightening the prospects for an interest rate cut at the end of the month, and one of the biggest beneficiaries could be the rupee, said market watchers.

India’s headline inflation for December came in at 7.18 percent, its lowest level in three years – against forecasts of 7.4 percent – marking three consecutive months of declines. This offers room for the Reserve Bank of India (RBI) to support growth via a rate cut, which in turn could improve the sentiment for the country’s flagging currency, said analysts.

“The markets will cheer a rate cut, and that could elicit capital inflows. Anything that restarts growth and the investment cycle will be positive for the rupee,” Aninda Mitra, head of Southeast Asia economics at ANZ told CNBC on Monday.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza