Frances Cheung, Research Analyst at Westpac, points out that the USD/INR has broken key levels from above as the improvement in the relation between the RBI and the government is a short-term supportive factor for the INR.
Key Quotes
“The lower oil prices are also seen as beneficial for both fiscal and external balances. Cooling US growth expectations and less hawkish Fed rhetoric may mean the retracement in USD/INR has some more room to go near-term. However, the lingering fiscal and C/A deficits remain the main drag on the INR on a multi-month horizon, while we are mildly bullish the dollar. Any short USD/INR trade should be tactical in nature.”
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