INR update: Rupee likely to follow crude and high real rate

The markets seem to be focusing on country specific concerns like US trade tensions with China, lack of a Brexit deal and US earnings topping out. This has resulted in dollar strength across other DM currencies while equities have got sold off. Crude trades below 70  on demand related concerns plus the fact that the earlier supply cut threats from Saudi Arabia have been taken back.

INR is likely to follow crude oil plus the fact that the CPI print is much below the target of 4%. The result is a sustained high real rate for the Indian economy with reasonable fiscal hygiene which should attract debt investments with the caveat of approaching political risks (state election results on 11^th Dec). USDINR 1m NDF is trading marginally left while other EM currencies have mildly appreciated today morning. CMP 72.57, Range 72.65-72.45. Medium term range for USDINR should be 72.25-73.