Via Bloomberg,
An interesting one for those that trade the Indian Rupee. India is on course to achieve a decent current account surplus for the fiscal year of 2021. The current account surplus is expected to record a surplus of $72 billion vs a fall of $24.7 billion from 2020. The Reserve Bank of India may be trying to limit some of those inflows. The RBI will try to absorb the balance of payments via $80 billion in net FX purchases in 2021. However, there is a steep INR forwards curve that can offer a decent carry trade for investors
This faces a double whammy as countries with a current account surplus tend to be rewarded by the FX sphere with a strengthening currency.
USD weakness is gaining pace
The passing of the European Recovery fund this week added extra weakness to the USD. The EURUSD took out the 1.1500 level and the pressure is now on for the US to pass further stimulus. This USD weakness is set to continue as COVID-19 cases grow and President Trump admits that the outbreak will, 'get worse before it gets better'.
USDINR
So, this means that the bias is set for the USDINR to fall lower. Expect sellers on stop on a break of 74.22 to the downside.
