Remains A Laggard

USD/INR is trading with a firmer bias since the open, with the pair last at 81.65/70. There was some selling interest above 81.70 earlier, which was also evident last week. The pair hasn't been above 82.00 since the 10th of Jan, so there might be some selling interest ahead of this level. There is also the 20-day EMA at 81.80, the 50 day at 81.95. On the downside the 100-day EMA comes in at 81.49.

• INR continues to lag the firmer ADXY backdrop. Equity market wobbles following the Adani saga are not helping, although local bourses are back in positive territory, after opening down 1%.
• Still, Indian equity flows remain comfortably negative YTD, against positive trends elsewhere (particularly South Korea, Taiwan and China).
• This, coupled with RBI's desire to rebuild FX reserves, suggests INR could well remain a laggard.
• There are the PMI prints later this week, but these are likely to be overshadowed by the budget, which is delivered on Feb 1 (Wednesday). The government has the delicate balancing act of supporting growth/development, while also reducing the deficit/curtailing borrowing.