INR update: Uneventful global wires, Inflows and election focussed action in USDINR

With low volume and surety from the ECB of accommodative monetary policy for longer periods, Euro remains the best DM funding currency, and therefore it would be logical to expect EURUSD to not cross 1.1340 (200 WMA) convincingly. On the other hand from a 3-6 months the pair can be sold near 1.1340 with a possibility of a move towards 1.10 and lower. Not much happening otherwise globally US-China trade standoff should get resolved, perhaps like US-North Korea standoff resolution, wherein markets and US will rejoice and nobody will understand what has really changed. But status quo is not a bad option for risk sentiments.

USDINR 1m NDF is trading further right today at 9p while EM currencies are moderately weaker since yesterday night. The buying since 9AM today morning could have been because of stops plus Nationalized banks buying USDINR in cash to ensure cash tom remains at normal levels before the 23^rd April auction. The major driver for USDINR for the last week and perhaps the next 2 weeks would be inflows which are doing the news rounds. Therefore I would expect USDINR to remain in 69.50-6850 range for most of April. Currently beyond April there doesn’t seem to be a reasonable basis to forecast USDINR levels, but at least in case of an unexpected Modi defeat USDINR would move higher by 4-5 biggies while the move lower could be restricted to 66.5-67 levels only. For today I would look to sell the pair at 69.25-30 levels for a move back to 69 levels. CMP 69.15, Range 69.30-69.00.