USD/INR Just Below Recent Highs, RBI Minutes Point To Continued Inflation Focus

INR has dealt in narrow ranges this week, following the broader USD trend seen in recent dealing. USD/INR prints at 82.75/80 ~0.1% softer in early dealing, in line with lower USD indices but lagging higher beta FX. There still appears to be resistance above the 82.90 level.

• Local equities are firmer today, but still close to month to date lows (Nifty around 17570). Offshore investors continued to move back into local equities in the first part of the week ($181.2mn).
• The RBI released the minutes of the February MPC meeting yesterday. The Repo rate was raised 25bps at the meeting. The minutes revealed that 4 out of 6 MPC members favoured a 25bps hike, citing persistent inflation. Two external members advocated a pause, citing the risk of weaker growth and the need to assess the impact of monetary tightening.
• Important to note that since the meeting January inflation printed above the RBIs CPI band and that core inflation remained sticky as well.
• The next data of note is Q4 GDP, which is on the wires on Tuesday. The Bloomberg survey median looks for a YoY increase of 4.6%, a decrease from the Q3 figure of 6.3%.