Ahead of the close today, INR hit the.........>

INDIA: Ahead of the close today, INR hit the lowest levels against the USD since

mid-December at 72.2525. USD/INR gapped higher at the open alongside global

risk-off appetite as markets responded to the escalating trade tensions between

the US and China. The INR recovered much of the losses, however, as Trump stated

China called US trade negotiators last night & they want to come back to the

negotiating table.

-This also fed into better equity prices, with the NIFTY50 and Sensex both

registering sharp gains as markets also eyed fiscal support measures announced

at the tail-end of last week, including confirmation that the government would

withdraw surcharge taxes on foreign investors in India.

-Monday's move saw USD/INR break above the 72.1179 Fib resistance level, opening

a move toward 73.02. Nonetheless, the intraday volatility has propped up the

implied vol term structure, edging the 1m measure back toward the early Aug

highs of 7.7 points.

-GDP data Friday takes focus, but PM Modi's attendance of the G7 Summit will

also be carefully watched, particularly any comments on tensions with Pakistan.