USD/INR: Bullish momentum to continue for the near-term

The USDINR pair opened higher today at 75.90 tracking weakness in Asian currencies. Offshore Yuan fell to a 9 month low, weighing on other Asian counterparts. Later, the USDINR pair erased almost all its intraday gains on likely foreign fund inflow and closed at 75.75 level, 3 paise higher from the previous close of 75.72. The inflows are mostly linked to Kotak Mahindra Bank's QIP, Bharti Airtel Equity raising & Vedanta Capital raising for delisting. Implied Vols as well as Onshore-offshore spread have come down easing pressure on the Rupee to some extent. The benchmark new 10 year bond yield is almost around 5.75% from last couple of sessions while the equities extended bullish momentum, gaining 1.88% for the day.

Washington and Beijing have been at loggerheads over the new security law passed by Beijing on Hong Kong. Market Participants remain jittery over rising tension between the US and China and its impact on the global economy that is already hit by the COVID-19 and lockdown. 

German Chancellor Merkel warned that the fiscal initiative from the EU might not be agreed upon next month. Euro in a knee jerk reaction fell below 1.1000 mark, but soon recouped its losses and is back to psychological mark.

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