INR forecast: Opens stronger at 73.86 as against yest close of 74.07. Range for the day is 73.70 to 74.20.For last two days, RBI is seen selling USD around 74.00 levels and for very short term INR may remain in range of 73.30 to 74.50. Over medium term, view is of weakness.
Interestingly till August 2018, INR weakness was in line with other EMs. However in Sept, we weakened abut 4.5% while other EMsweakened by 1-1.5%. This disparity in weakness %, could either mean that in Oct we may remain stable and not weaken if other EMsweaken or otherwise it could mean that investors are pricing INR risks higher. A second situation would be a case of concern and it needs monitoring.
Overnight, IMF cut growth forecast for US and China for 2019. Equities remained under pressure. EUR struggles with Italy politics and GBPlooks strong. This could mean some cooling off in crude prices.
This week, we have India CPI and trade deficit numbers.