Strongest USD/INR Level Since Early January, RBI On Tap This Week

Pressure continues on INR as broad based USD strength continues to help USD/INR firm. The pair has opened dealing 82.40/50, dropping ~0.7% today.

• INR did finish stronger on Friday as India's central bank noted that the country's banking sector was "resilient and stable. The Reserve Bank of India, which is also the banking sector regulator, said banks are in compliance with rules, including loan exposure to large companies.
• Last week through to Thursday Foreign Investors sold ~$1.4bn of Indian equities, as the Hindenburg report on Adani continued to weigh on domestic markets.
• USD/INR is now at its highest level since 10 Jan. The cross is dealing above all its key EMAs, bulls next target is 83 handle. Bears first look to sustain a break of 82 to turn the tide.
• The lower commodity price backdrop, with the Bloomberg spot energy price index back to late 2021 lows, is now aiding INR at this stage.
• On the wires on Friday we had Jan S&P PMIs. The composite number printed at 57.5, down from prior read of 59.4. Services printed 57.2, modestly lower than the prior 58.5 print.
• RBI's monetary policy decision is on the wires on Wednesday. They are forecast to increase the repurchase rate by 25bps to 6.5%.