USD/INR Still Edging Higher

Spot USD/INR is edging higher in early trade today, but is yet to break the 77.80 level. The 1 month USD/INR NDF is just above 78.00, a level which hasn't been sustained over the past month. The rupee has yet to receive support from softer USD sentiment seen in the majors.

• Local equities are weaker today, which would mark the 5th straight session of losses. This comes after yesterday's 50bp hike, with more to come from the RBI, as it looks to bring inflation back under control.
• The trend on equity flows still looks skewed towards outflows from an offshore investor standpoint. June has seen just under $1.2bn in net outflows so far.
• Higher oil is not helping, with Brent pushing towards $124/bbl. This is also seeing onshore yields opener up firmer. The 10yr got to as low as 7.44% yesterday, but we are back above 7.52% today.
• Bloomberg also notes that cumulative monsoon rainfall is 42% below normal as at the end of yesterday. This could have implications for food inflation down the line.
• Tomorrow, IP figures print for April, with the market looking for a 5.1% gain in YoY terms, versus 1.9% previously. However, there is likely to be more focus on next Monday's May inflation print.