RBC EM Trade Of The Week: Short USD/INR

RBC note that “India's economic indicators have surprised to the upside recently, signalling a domestic-driven growth acceleration. The slide in crude oil prices below $80/bbl has helped to narrow India’s trade deficit, and foreign capital inflows into the India stock market have been persistently strong since May.”

• “Falling cross-asset volatility should also raise the rupee’s attractiveness as a carry trade, particularly given its range-bound price action in the past several months.”
• As such, they recommended selling USD/INR 1-mth NDF at INR82.00, targeting a spot move to INR81.55, with a stop set at a daily close above INR82.10 in spot terms.