Evening Currency Updates - Dec 8, 2021 - Kotak Securities

Anindya Banerjee, DVP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities:

"The USDINR spot closed flat near 75.45 levels as RBI policy had little impact on USDINR. A bit of wobble was noticed post-policy as traders went long on policy divergence between dovish RBI and hawkish Fed, but thanks to lumpy corporate $ flows, it returned to unchanged by the close. Over the near term, the focus will shift to global markets, and there the risk-on mood in equity markets and strength in Chinese currency may rub against the strength in the US Dollar Index. The result can be a range bound market over the near term. We expect a range of 75.20 and 75.65 over the near term. Indian 10-year bond yields came off by 4bps at 6.34 as traders were relieved that RBI did not follow the Fed and strike a hawkish note or hike reverse repo rate. RBI is looking to normalise the short-term rates by absorption through VRR. As a result, it may flatten the yield curve going forward with short-term rates moving towards repo and long-term rates remaining capped thanks to dovish RBI, improving receipts of government, and lower oil prices. We expect a range of 6.25-6.40 over the near term".

Source : Equity Bulls

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