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Forwards Indicate Further INR Strength


Focus will be on the rupee today, USD/INR is expected to extend Friday's losses as the rate plays catch up with a weaker greenback following a less dovish then expected Powell at Jackson Hole on Friday. USD/INR dropped some 0.72% on Friday after state banks reportedly stopped defending the 74.10 level with dollar purchases on behalf of the RBI. The Central Bank is said to have been defending the 74.00 handle for two months with inflows on MSCI rebalancing on several high profile IPO's exerting upward pressure on INR. 1-Month NDF's last at 73.75 compared to around 73.95 at Friday's cash close.

  • Elsewhere the RBI sold INR 340bn on debt on Friday against an INR 310bn target, the auctions were taken down smoothly with primary dealers able to avoid having to mop up the sales.
  • RBI Governor Das spoke on Friday and reassured markets that the RBI will telegraph any shifts in policy stance well in advance of making any changes, and added the Bank is in no hurry to remove monetary accommodation.
  • Markets look ahead to GDP data and fiscal deficit figures due tomorrow.

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