•  The rupee weakened sharply despite a rate hike by the RBI as FII/FPI outflows from the domestic markets accelerated. Indian rupee remained near record lows at around ₹96.85 per dollar, pressured by a stronger US dollar, higher global bond yields, foreign equity outflows and rising crude prices, with Brent crude moving above $101.50 a barrel. The RBI sought to support the currency and contain inflation by raising the repo rate by 25 bps to 5.50, its first hike since February 2023, while shifting its policy stance to “calibrated tightening.”
• Inflation rose to 4.82 in August 2026, above the RBI’s 4 target but within its 2–6 tolerance band, prompting the central bank to raise its inflation forecast to 5.2. At the same time, the RBI remained optimistic about growth, upgrading its FY2026/27 GDP forecast to 7.1 from 6.7. Liquidity-management measures and possible intervention by state-run banks were also expected to provide support to the rupee amid global uncertainty and elevated import costs. Equity market benchmarks ended about 0.75 lower today.
• The US dollar strengthened, with the DXY trading at 102.24, as markets await the release of the FOMC meeting minutes later today. The euro and British pound are trading slightly lower against the greenback ahead of the release.
• UK housing data remained subdued, with the Lloyds House Price Index showing prices unchanged year-on-year and month-on-month in September, below expectations. The euro found some support from stronger German economic data. German industrial production jumped 2.0 month-on-month in August, well above the 0.5 forecast and reversing July’s decline. Growth was driven mainly by construction, although automotive production fell 5.4. Annual production increased 2.3, pointing to some improvement in Germany’s industrial sector.
• Key data releases ahead today: US: ADP Weekly Unemployment change; Trade balance; RCM/TIPP Eco. Optimism index; FOMC Meeting Minutes

The rupee opened flat with a negative bias at 96.42 this morning, as the greenback remained supported in international markets amid firm US treasury yields. Meanwhile, market participants await the RBI's monetary policy decision due later today. Domestic equity benchmarks were down around 0.7 in early trade, adding to the cautious sentiment.

DXY is trading slightly lower at 102.05 level. Economic numbers from the US were mixed. U.S. economic sentiment improved in October, with the Economic Optimism Index rising to 46.8 from 45.6, beating expectations of 44.5. The improvement in consumer financial and economic confidence provides modest support for the U.S. dollar.