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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
INR
Spot USD/INR has gapped lower at the open of Monday trade, the pair down 0.50% and back near the 83.00/05 level in recent dealings (lows were at 82.95). Optimism has been buoyed by strong exit polling from the general election for incumbent PM Modi. Results are not published until tomorrow.
- Modi is seen as a positive for the growth backdrop from a policy continuity/reform perspective. India growth has generally been a positive stand out in recent years. Q1 GDP figures, released on Friday, were better than expected, although the detail was not as positive from a domestic spending standpoint.
- Today's sharp fall puts spot USD/INR back sub all key EMAs, except for the 200-day. We have spent little time below this support point in recent years, see the chart below.
- The rough sell-side consensus is that we are unlikely to see any meaningful run of spot INR gains, as the RBI is likely to maintain broader stability in FX.
- There is certainly scope for a recovery in offshore portfolio inflows (which were -$3.3bn in May). However, this isn't expected to drive INR spot gains.
- The rupee does remain a favor carry trade though, given its attractive yield characteristics and low volatility.
Fig 1: USD/INR Testing Downside Support Levels
Source: MNI - Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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