USD/INR one-month risk reversals, a gauge of calls to puts, rose to 0.95 on Tuesday, having bottomed out at 0.35 on June 9, according to data provided by Reuters.
The rise in risk reversals represents an increase in demand for USD/INR calls or bullish bets. In layman’s terms, it indicates the investors are adding bets to position for weakness in the Indian rupee.
The increased demand for call options validates the multi-week-long contracting triangle breakout on the daily chart confirmed by Tuesday’s 0.72% rise. The technical breakout has opened the doors to a re-test of the April 21 high of 76.82.
Risk reversals
Daily chart
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