Rupee strengthens with decrease in US yields, but election uncertainty remains a concern | Finance News

Foreign investors are pulling out money from Indian equities ahead of the election results on June 4, causing the benchmark Nifty 50 index to hit a three-week low. Worries over the outcome of the Indian elections have prompted foreigners to withdraw $2 billion from Indian equities in May, with more than $800 million pulled out on Thursday alone.

The Indian rupee is expected to open at 83.48-83.50 against the US dollar, benefiting from the drop in US Treasury yields as the American labor market shows signs of cooling. Despite the election uncertainty, the rupee has not been significantly impacted, thanks to the Reserve Bank of India’s management of the currency.

US Treasury yields fell on Thursday following higher-than-expected initial jobless claims and a slowdown in non-farm payrolls growth. This has raised concerns about a potential softening in the labor market, with investors closely monitoring upcoming US inflation data.

San Francisco Fed President Mary Daly expressed uncertainty about future inflation trends, stating that while there are signs of cooling price pressures, the situation remains unpredictable. The market is eagerly awaiting the US inflation data next Wednesday for further insights into the economic landscape.

As the election results draw near, the financial markets are bracing for potential volatility and reacting to the uncertainty surrounding the outcome. Investors are advised to stay vigilant and monitor developments closely to navigate the shifting landscape effectively.