1m NDF is 4.5p right and 1y NDF is 38p right which is the highest I have noted in the last 2 months. USDINR has ironically moved lower from 72.45 to 720 levels. In October when EM currencies were sliding, RBI was expected to hike rates as the most obvious (but debatable) solution to support INR. RBI did not hike rates and immediately we saw RBI selling big in the USDINR market to back its decision of no rate hikes. I would think that today too after the RBI governor’s resignation, the selling has been done by RBI to alleviate market panic. INR has appreciated in spite of a very INR negative development of the ruling party loosing in 5 state elections. EM currencies have not appreciated either to help the Rupee. US-China friction should also help the view of Rupee weakness otherwise.
Therefore sentiment for Rupee should remain negative for some time, although RBI will support the local currency aggressively during the day. With half a day remaining, the downside could be significant for USDINR, but for now looks like 71.75,71.50 could be levels where RBI selling could pause. Overnight longs would make sense from a trading risk reward perspective. CMP 71.85
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