📰 Today’s Highlights – 20 July 2025
Contrasting inflation trends in India and the U.S. continue to influence India’s currency markets. India’s retail inflation hit a six-year low in June and is projected to dip below 2% in July, nudging the RBI toward potential rate cuts. Meanwhile, U.S. inflation remains elevated, delaying Fed easing and compressing USD/INR forward premiums. The rupee strengthened modestly to around ₹85.78/USD due to broad dollar selling. The rupee also shows tighter correlation with equity markets amid subdued volatility and muted FPI flows.
Daily Current Affairs – MCQs (20 July 2025)
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**What is India’s retail inflation trend?**A) Hitting a six‑year highB) Dropping to a six‑year lowC) Stable around 4%D) Increasing due to food pricesAnswer: B) Dropping to a six‑year lowExplanation: June CPI fell to its lowest level in six years, and forecasts expect it to dip under 2% in July.
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**What is the projected direction for India’s interest rates?**A) Likely hikeB) Remain unchangedC) Possible further cutsD) Need for dollar supportAnswer: C) Possible further cutsExplanation: Cooling inflation makes another RBI cut probable.
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**How did U.S. inflation affect the rupee?**A) Strengthened rupeeB) Detached impactC) Compressed USD/INR forward premiumsD) No effectAnswer: C) Compressed USD/INR forward premiumsExplanation: Diverging rate expectations are tightening forward premiums.
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**Where did the rupee strengthen to today?**A) ₹86.30B) ₹86.10C) ₹85.78D) ₹85.50Answer: C) ₹85.78Explanation: Interbank dollar sales lifted the rupee to around 85.78.
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**What is the 30‑day correlation between rupee and Nifty?**A) 0.25B) 0.42C) 0.66D) 0.80Answer: C) 0.66Explanation: Rupee-equity correlation reached its highest in a month at 0.66.
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**How volatile is the rupee currently?**A) Very volatileB) One-month implied volatility near 4.2%C) Over 10%D) MinimalAnswer: B) One-month implied volatility near 4.2%Explanation: FX volatility has eased to approximately 4.2%.
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**What is SEBI proposing for mutual funds?**A) Ban equitiesB) Merge value and contra funds & wider asset mixC) Mandate gold investmentsD) Increase expense ratiosAnswer: B) Merge value and contra funds & wider asset mixExplanation: Proposed rules allow blending of equity sub-strategies and diverse holdings.
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**Why are FPI flows muted?**A) Domestic electionB) Trade tensions & global uncertaintyC) RBI policyD) High domestic yieldsAnswer: B) Trade tensions & global uncertaintyExplanation: Lingering U.S. tariff fears and global risk aversion dampen FPI sentiment.
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**What trend is observed in equity and FX markets?**A) Highly directionalB) Rangebound and lacking directionC) Sharply trending upD) Highly volatileAnswer: B) Rangebound and lacking directionExplanation: Both markets are trading in tight ranges without clear catalysts.
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**When might India’s CPI drop below 2%?**A) AugustB) SeptemberC) JulyD) OctoberAnswer: C) JulyExplanation: Forecasts suggest CPI may fall below 2% in July.
✅ Summary:
Today’s quiz focuses on India’s falling inflation and evolving RBI outlook, rupee strength amid U.S. dollar moves, tighter rupee-stock market linkage, muted volatility and FPI flows, and SEBI’s proposals to reform mutual funds.
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