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Rupee Outperformance Continues, CNH/INR Eyeing Test Of 200-day MA Support

INR

USD/INR is extending its break sub the simple 200-day MA, last near 82.79 (earlier lows were at 82.725). This is the lowest levels in the pair since early September last year. Whilst percentage change moves are modest ( the rupee is up only 0.55% so far this year), its outperformance against the rest of EM Asia FX remains evident.

  • On top of the news from earlier in the week around India bond inclusion into Bloomberg's EM bond index, growth expectations remain elevated as well.
  • RBI Governor Das stated growth may be closer to 8% for the fiscal year (ending this March), which would be above the government's target (BBG). Survey business sentiment measures remain very elevated, particularly compared to the rest of the world.
  • The preferred method to express bullish INR views is likely to remain on a cross basis, as the RBI is still likely to remain guarded against rapid rupee appreciation against the USD. CNH/INR is one such cross, where relative growth and carry fundamentals remain stacked in the rupee's favor.
  • This cross was last near 11.48, very near its simple 200-day MA, which has been a support point so far this year. A clean break lower could see the 11.40 region target.
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USD/INR is extending its break sub the simple 200-day MA, last near 82.79 (earlier lows were at 82.725). This is the lowest levels in the pair since early September last year. Whilst percentage change moves are modest ( the rupee is up only 0.55% so far this year), its outperformance against the rest of EM Asia FX remains evident.

  • On top of the news from earlier in the week around India bond inclusion into Bloomberg's EM bond index, growth expectations remain elevated as well.
  • RBI Governor Das stated growth may be closer to 8% for the fiscal year (ending this March), which would be above the government's target (BBG). Survey business sentiment measures remain very elevated, particularly compared to the rest of the world.
  • The preferred method to express bullish INR views is likely to remain on a cross basis, as the RBI is still likely to remain guarded against rapid rupee appreciation against the USD. CNH/INR is one such cross, where relative growth and carry fundamentals remain stacked in the rupee's favor.
  • This cross was last near 11.48, very near its simple 200-day MA, which has been a support point so far this year. A clean break lower could see the 11.40 region target.