The moves in USDINR will be dependent on sudden headlines and tweets related to Ino-Pak tensions. 4-5 days without incident would signal that the escalation risk is behind us, but in the interim the I would quantify the risk as high. Meanwhile there could be large inflows in pipeline in USDINR which can again take the pair towards 70.95 but sustaining lower than that would be difficult, till the time the geo political tensions are behind us. Price action yesterday indicated heavy intervention by RBI and the same seems to be the case today. In the offshore market also USDINR did not cross 71.23 which indicates possibility of an inflow. USDINR 1m NDF trades 8p right indicating upward risk to the pair. Without a wave of news like yesterday a move higher in USDINR cannot be envisaged. CMP 71.17, Range 70.95-71.50.
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