FPI sold Rs 45,536 crore in September as analysts seek stable rupee and yields
GS3Economy · S&T · Environment · Security· Capital markets & SEBI· Prelims·
Capital account stability and currency risk: a key GS3 topic regarding global macroeconomic influences.
Why in news
Foreign Portfolio Investors (FPIs) sold Rs 45,536 crore in September as analysts cited high US 10-year Treasury yields, elevated crude prices, and rupee volatility as key deterrents.
Background
FPIs sold a total of Rs 45,536 crore in equity in September. Analysts identified the US 10-year Treasury yield reaching 5.34% (highest since 2002) and rising crude prices as primary drivers of capital outflows.
Facts for Prelims
- FactFPI equity selling in September: Rs 45,536 crore
- FactUS 10-year Treasury yield reached 5.34% in late September
- FactRBI's October policy meeting scheduled for October 5-7
- FactReuters poll suggests a 25-basis-point rate hike to 5.50% by RBI
Prelims practice question
What was the level of the US 10-year Treasury yield reached in late September as cited by analysts?
- (a)6.25%
- (b)4.50%
- (c)3.10%
- (d)5.34%
Show answer
Answer: (d) 5.34% — The note states the US 10-year Treasury yield reached 5.34% in late September.
For Mains
Q. Analyze the impact of global interest rate fluctuations and commodity price volatility on India's capital account and currency stability.
Dimensions to cover in your answer
- Capital flight risk: High US Treasury yields making dollar-denominated assets more attractive than emerging market equities
- Current account pressure: High crude oil prices widening the import bill and fueling domestic inflation
- Currency depreciation: Rupee volatility eroding dollar-denominated returns for foreign investors
Keywords: Foreign Portfolio Investment · Capital Outflow · Current Account Deficit · Yield Curve · Currency Risk · Macroeconomic Stability
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