Rupee Strengthens; RBI Eyed

Spot USD/INR has opened lower, the rupee gaining even in the face of greenback strength. USD/INR last down 0.625 at 72.9113, brushing support at 72.90 earlier in the session -a fresh 5-month low. Bears look for a break of a falling wedge support line at 72.79, while a more sustained move lower will necessitate a break of September 2020 low of 72.76.

• Market participants await the RBI meeting on Friday for any measures to support a debt market facing heavy supply after a borrowing binge in 2020 and elevated issuance figures in 2021/22. Rates are expected to be on hold for a fourth month, although lower inflation figures had seen some speculation of a 25bps cut. This seems to be putting the cart before the horse, at 4.59% inflation is only just within the RBI's 2%-6% target band. The bank are expected to upgrade growth forecasts as the COVID-19 vaccine roll out progresses.