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Rupee Outlook and Strategy

* US dollar rose 1.0% yesterday hitting a 16-month high after US CPI data showed inflation surged to its highest rate since 1990. Further, US treasury yields increased on expectations that US Federal Reserve may raise interest rates sooner than anticipated to combat surging inflation

* US CPI YoY data showed inflation accelerated by 6.2% in October compared to 5.4% in September

* Rupee future maturing on November 26 depreciated by 0.41% yesterday on strong dollar and surge in crude oil prices. Further, the rupee slipped on FII outflows and a muted domestic market

* The rupee is expected to depreciate today on the back of a strong dollar and risk aversion in global markets. Market sentiments were hurt on worries that elevated inflation may push the Fed to hike rates sooner than expected to address stubbornly high inflation. However, a sharp fall may be prevented on softening of crude oil prices and IPO related inflows

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