Market round-up: Dollar index at 8-month high on US Fed rate hike odds

Dollar index touched a fresh eight-month high of 98.71 against a basket of currencies in Asian trade on Monday


In September, the US Federal Reserve left rates unchanged and the final meeting for this year will be held on 14 December. Photo: Bloomberg
In September, the US Federal Reserve left rates unchanged and the final meeting for this year will be held on 14 December. Photo: Bloomberg

The dollar index touched a fresh eight-month high of 98.71 against a basket of currencies in Asian trade on Monday, on the rising prospects of an interest rate hike by the US Federal Reserve in December this year.

According to the CME Group FedWatch Tool, the 30-day Fed Fund futures prices indicate a 69.5% probability that the Fed funds target range will be higher than the current range of 25 to 50 basis points.

One basis point is one-hundredth of a percentage point.

In September, the US Federal Reserve left rates unchanged and the final meeting for this year will be held on 14 December.

Weekly inflows to India funds at 1-year high

Investor commitments to Indian equity funds climbed to a level last seen in early 3Q15, according to data collated by Emerging Portfolio Fund Research (EPFR).

“A recent rate cut by the Reserve Bank of India (RBI), allied to the boost decent monsoon rains should give the farming sector, have raised the hopes for India’s domestic demand story in the coming months,” EPFR said.

Inflows have been much lower this year, compared with 2014 and 2015, when inflows surged after the new government was elected.

Global funds have taken profits in Indian stocks this year, leading to lower allocation to India in emerging market and Asia ex-Japan funds.

Corporate bond issues at record high in September quarter

Corporate debt issuances touched an all-time high of Rs2.1 trillion in Q2FY17 and, on a year-on-year (y-o-y) basis, rose 58.5%, according to a recent Religare Institutional Research report.

Companies have been lapping up money rapidly from the debt and money markets, given the sharp drop in bond and money markets yields, it said.

Given that companies could borrow at a rate cheaper by almost 100 basis points through bonds instead of loans, the continued surge in bond issuances could also partly explain the deceleration in bank credit growth.

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