TD Securities Issue Short USD/INR Idea

{IN} INR: TD Securities Issue Short USD/INR IdeaINR71.6897 with a stop at INR75.6425

• TD "think INR is one of the better placed currencies in Asia given India's sharp decline in COVID cases over recent weeks. Unlike many other countries in Asia, high frequency indicators in India have turned more positive and recovery is taking shape amid an easing in mobility restrictions across many states. We think GDP growth will likely reach 9.0% this fiscal year. We don't expect next week's RBI meeting to get in the way of potential INR gains, with an unchanged policy outcome likely. INR also offers one of the best carry and risk adjusted returns in EM FX at present. Technical indicators have turned more favourable, with the MACD (12,26) differential turning lower for USDINR. At the same time we think the USD appears to have lost some momentum and looks moderately expensive in our view. Additionally the recent CFTC IMM report revealed that aggregate net USD positions turned positive for the first time in a year, suggesting scope for short covering has dissipated. A restrained USD should bode well for INR."