Morning INR update

All expectations are priced in and markets hardly moved yesterday with no incremental news. I would continue to expect Netherland election risks to get priced into EURUSD driving the pair lower towards 1.0490 before the 15^th March. ECB statement tomorrow can be less dovish on the back of improving inflation and growth outlook, where the pair could see a moderate bounce providing an opportunity to create EURUSD shorts.

EM currencies have appreciated since yesterday. USDINR 1m NDF is 8p left keep the pair offered. Nationalized banks continue to be on bids throughout the day keeping intraday volatility low and therefore I would continue to run overnight shorts for a move towards 66.50 or temporarily lower on the back of state election exit polls and results later this week. Stop would be a daily close above 66.72. For importers though these levels could be apt to offload risk and hedge for the medium term, as downside from here is limited and should be temporary. On 15^th March we have the FOMC and Netherland elections, either of which can end the lower move in USDINR seen currently. CMP 66.63, Range 66.70-66.58.