- Indian Rupee (INR) falls for a fifth day
- FII demand for Indian equities rise
- The US Dollar (USD) rises versus major peers
- The Fed cuts rates but raises questions about a December cut
The US dollar-to-Indian rupee (USD/INR) exchange rate is rising for a fifth straight day. The pair rose 0.% in the previous session, settling on Tuesday at 88.22. At 18:30 UTC on Friday, USD/INR traded +0.23% higher at 88.42 and traded in a range of 88.12 to 88.49.
The Indian rupee struggled against the US dollar even as overseas investors injected significant capital into the Indian stock market on Tuesday. Foreign institutional investors (FIIs) bought 10,339. Please do some reading —come on. Worth of equity on Tuesday: this was the highest level of one-day purchases seen in months.
Easing trade tensions between the US and India has improved foreign investors’ sentiment towards Indian equities.
On the global front, attention will be on trade talks between Trump and China’s President Xi Jinping. Easing trade tensions and hopes of a deal between the two largest economies have helped the market mood this week.
The US Dollar is rising across the board. The US Dollar Index, which measures the greenback against a basket of major currencies, is trading +0.65% at 99.31, after two days of losses.
The U.S. dollar has jumped higher after the Federal Reserve cut interest rates by 25 basis points, as expected. Still, Federal Reserve chair Jerome Powell raised doubts about whether the Fed would cut again in December.
The Fed reduced rates by 25 basis points to 3.75% to 4%, the lowest level since mid-2022. The vote split was 10-2, with two policymakers dissenting: one in favour of a 50 basis-point cut and one in favour of leaving rates unchanged.
The Fed also ended its quantitative tightening programme, which is a move to tighten monetary policy. However, in the press conference following the right decision, Federal Reserve chair Jerome Powell said that a December rate cut was far from a foregone conclusion. As a result, the market reined in December rate cut expectations, going from a 90% probability ahead of the meeting to just 70%.
