Forwards Indicate Rupee Could Partially Reverse Move Higher

After weakening since mid-March the rupee posted gains yesterday, USD/INR closed at session lows of 74.9275, the pair rose 4.24% since March 23, the rise accelerating after the announcement of the RBI's GSAP programme on April 7. The GSAP operation yesterday was not well received, which saw 10-year yields spike higher and prompted talk of additional RBI measures. There was also chatter of central bank intervention to help bring the rupee off a 9-month low. However concerns over a resurgence in COVID-19 cases and its impact on the economic growth is expected to keep the pressure on the rupee. USD/INR forwards are slightly higher, last up 0.06 at 75.15.

• Data late yesterday showed that the trade deficit widened less than expected to $13.9bn compared to estimates of $14.1bn. A 60.3% jump in exports helped the print as global demand increases. Wholesale prices also rose, increasing at the quickest clip since 2021 on elevated commodity prices and higher input costs. WPI rose 7.39% against estimates of 6.16%.