Rupee Expected To Open Flat After Drop

Forwards indicate a flat open for USD/INR after the rupee endured sharp declines yesterday. USD/INR rose 1.2% to close at 73.3850, the biggest jump since February 26. The rupee has retraced almost all of March's gain, USD/INR was some 2.05% lower at one point in March.

• Some of the March gain was attributed to foreign flows into local stocks, in particular a number of high profile IPO's. There is speculation that some of the weakness in the rupee is due to profit taking on these positions. The data is reported with a lag, but last week saw net sales of $530m, compared to net purchases of $1.579bn the week previously.
• There is still some concern over coronavirus cases, but FinMin Sitharaman was quick to reassure markets that the recovery was gathering steam. Speaking at the sixth annual meeting of the Board of Governors of New Development Bank(NDB) through video-conference, Sitharaman highlighted that India's COVID-19 vaccination drive, the largest in the world, is underway and to date, 63.9 million doses of made-in-India COVID vaccine have been supplied to 80 countries including 10.4 million doses of the vaccine as grants.
• Markets look ahead to fiscal deficit figures at 1130BST/1600IST, and eight infrastructure industries at 1300BST/1730IST.