Daily Digest Market Movers: Indian Rupee receives downward pressure from foreign outflows

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  • The US Dollar (USD) gained support following a surge in US Treasury yields, which climbed over 2% on Monday. This rise was fueled by signs of economic resilience and growing concerns about a potential resurgence of inflation in the United States, reinforcing expectations of tighter monetary policy.
  • According to the CME FedWatch Tool, the likelihood of a 25-basis-point rate cut in November is 89.1%, with no expectation of a larger 50-basis-point cut.
  • Federal Reserve Bank of Minneapolis President Neel Kashkari highlighted on Monday that the Fed is closely monitoring the US labor market for signs of rapid destabilization. Kashkari cautioned investors to anticipate a gradual pace of rate cuts over the coming quarters, suggesting that any monetary easing will likely be moderate rather than aggressive.
  • Foreign institutional investors have sold approximately $10 billion worth of Indian stocks in October so far, surpassing the previous record monthly outflow of $8.35 billion set in March 2020, according to a Reuters report.
  • The Reserve Bank of India stated in its October bulletin that aggregate demand in India is expected to rebound from the temporary slowdown observed in the second quarter, driven by a surge in festive demand and an increase in consumer confidence.


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