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Rupee Underperforming Broader USD Weakness

INR

Spot USD/INR is modestly off recent highs. We last tracked 78.28, versus record highs from last week of close to 78.40. The 1 month NDF sits just below 78.50, with gains towards 78.60 drawing selling interest through late last week.

  • The rupee is underperforming the broader USD sell-off today, but pent up USD demand, with RBI working to cap the upside in USD/INR, may be a factor in limiting the downside.
  • Brent crude has also recovered from its recent lows, last tracking back above $113/bbl. This has taken some of the shine off the risk-on rally for the INR. Onshore equities are up above 1% so far today.
  • Locally, monsoon rainfall is 7% below normal condition as at the end of the weekend. Domestic covid cases continue to push higher but from a low base
  • The data calendar is fairly quiet. We do get fiscal deficit numbers for May on Thursday and infrastructure spending. More focus is likely to rest on the manufacturing PMI due on Friday for June.

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