USD/INR fell further still Monday,............>

INDIA: USD/INR fell further still Monday, finishing the session at 68.5338 to

mark the lowest close since Jun26 last year and extending the recent losing

streak to six consecutive sessions and to 10 of the past 12 trading days. While

reports of onshore USD buying from state-run banks countered some of the INR

strength, net foreign inflows into Indian equities, bonds and funds remain the

driving force behind Indian asset strength, with NSDL confirming there was a net

$930mln inflow last Friday (although there are signs this inflow could be

beginning to slow: NSE data shows domestic funds were actually net sellers of 

Indian assets Monday).

-Net foreign inflows continue to help Indian equities outperform, with the

Sensex hitting fresh six months highs Monday (although still lagging the S&P500

on a YTD basis).

-Options markets are beginning to catch up with spot INR, prompting USD/INR 1m

risk reversals to fall to 0.2325 vol points in favour of calls, the lowest

levels since March 2017.