USD/INR Down From Opening Spike, But Still Underperforming In NEER Terms

USD/INR spiked above 82.70 at the open, but we are now back just below 82.40. This is the level the pair couldn't get above on Friday, so may be where we are seeing good selling interest onshore. The 1-month NDF is back to 82.70, we were above 83.20 in early trade today, which was around closing levels from the end of last week. The INR continued to fall on Friday, off a further 0.34%, now down 2.20% from September highs.

• Cross asset headwinds are evident from equity market stand point. The NIFTY is down a further 1.2% so far today. Recent dips sub 17000 have been supported in the index (last around 17110).
• Onshore bond yields also continue to track higher, the 10yr yield is above 7.50%, near highs back to June of this year.
• The combination of higher oil prices and postponement of possible index inclusion into the J.P. Morgan bond indices are likely wiehging (above and beyond the move higher in core yiedls).