Echoing price action seen across broader......>

INDIA: Echoing price action seen across broader Asian FX, USD/INR gapped higher

at the open, hitting fresh multi-month highs before reversing somewhat as

Chinese markets stabilised. The spot rate held above the 200-dma at the close,

suggesting USD/INR bulls could build a base here (70.3824) before returning to

the better levels seen in February at 71.8237.

-As is the case across EMFX, the INR vol term structure has inverted

aggressively, with overnight vols trading a premium over all contracts out to

ten years. Options volumes have followed suit, with call demand clear from the

off. Call strikes at 69.90, 70.00 and 74.00 have garnered the most interest.

-The Reserve Bank of India rate decision takes focus Wednesday, with analysts

eyeing a 25bps rate cut to 5.5% for the repo rate, the lowest since 2010.

Mirroring a number of other global economies at present, members of India's

government have called for significant rate cuts to underpin better growth and

markets now price a 28% chance of rates being 50bps lower at their October rate

decision.