Fed Rate Hike

Submitted By- Group 7

Kathan Bhatt | Manasi Agarwal | Neha Maheshawari | Nishant Bist | Sukeerti Sharma
Interest Rate Worldwide
 Oil Prices Dropped
Prompted money away from commodity market to US Bonds and Dollar
International Brent crude oil futures were down 5 cents at USD53.85 a barrel
Libyas Biggest Oil Port, Fields Set to Reopen This Week more supply

Yields Yield Rate Increased, value declines

Expectations U.S. President-elect Trump will boost spending to foster growth
sparked an equity surge following his victory.

Stocks S&P 500 increase by 0.4%

Stoxx Europe 600 Index gained 0.7 %
Japans Nikkei 225 Stock Average climbed 0.7%, Hang Seng Down by 2.6%
 Currencies
The dollar jumped 1.2 percent to $1.0415 per euro, Strongest after 2003
U.S. consumer prices climbed 0.2 percent
The Fed lifted its target for overnight borrowing costs by 25 basis points

Commodities
Gold futures sank 2.9 percent to $1,129.80 an ounce
Bloomberg Commodity Index fell 0.9 percent to 2.60 percent

Bonds
Yields on 10-year Treasury notes rose three basis points
German 30-year bond yields climbed six basis points to 1.12 percent
Chinas 10-year sovereign yield surged 22 basis points to 3.45 percent
Lets understand how
does it impact India
 Invest that money
Financial
in government
institutes/investors
bonds of When US
Low interest rate borrows money
emerging increases the
and inflation in US on low interest
countries such as interest rates
rate in dollar
India in local
terms
currency terms

Demand for
dollar
Difference
increases Makes India
Money exits between
while less
India and interest rates
demand for attractive for
flows back to of India and
INR the carry
the US the US
decreases in trade
decreases
the forex
market

Result - dollar increases in value while INR depreciates.

Weak INR will result in more expensive imports (crude oil) which will
lead to inflation in the country.
Good for Indian exporters.