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Currency Update

February 23, 2021

RECAP - DOMESTIC

Net % Currency Expiry Previous Open High Low Close OI % Chng. Vol % Chng. Chng. Chng. USDINR 72.63 72.62 72.63 72.32 72.47 -0.16 -0.22% 2832251 2.89% 2643854 97.49% EURINR 87.70 87.94 88.10 87.67 87.94 0.24 0.27% 67889 -21.29% 180087 29.46% 24-Feb-21 GBPINR 101.18 101.49 101.78 101.28 101.63 0.45 0.44% 174785 -14.04% 284483 -10.31% JPYINR 68.76 68.79 68.94 68.47 68.64 -0.13 -0.18% 30215 -14.15% 36951 -14.51% Data Source: NSE

The Indian Rupee appreciated against the U.S. Dollar on Monday to its highest level in a year aided by corporate dollar inflows as well as reduced intervention from the central bank.

The Rupee ended at 72.51 to the dollar against 72.65 in the previous session. The currency gained to an intraday high of 72.29 to the dollar earlier in the day, its highest level since Mar. 3, 2020.

The inflows are attributed to raising of dollar-denominated funds by state-run companies like NTPC and REC, while PFC recently raised funds via dollar bonds.

The one-year forward premium was at 3.82 rupees against 3.72 rupees in the previous session.

The benchmark BSE Sensex and the broader NSE index posted their biggest single session losses in two months and ended 2.25% and 2.04% lower, respectively on Monday.

The benchmark 5.85% bond maturing in 2030 ended at 97.44 rupees, yielding 6.20%, its highest since Aug. 26, and against 97.94 rupees, yielding 6.13% yield at previous close.

Meanwhile, RBI released the MPC meeting minutes yesterday and the minutes revealed that one of the MPC member remains worried about inflation. RBI Deputy Governor and MPC member, Michael Patra said that while near term inflation outlook has improved, upside risks to inflation outlook persist.

RBI governor Shaktikanta Das said that Growth, although uneven, is recovering and gathering momentum, and the outlook has improved significantly with the rollout of the vaccine programme in the country.

He added that the growth momentum, however, needs to strengthen further for a sustained revival of the economy and for a quick return of the level of output to the pre-COVID trajectory.

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Currency Update

February 23, 2021

FPI ACTIVITY

FPI bought net $47.96 million as on 21 February 2021. For the month of February, FPI were net buyers of a total of $4.225 billion.

The data presented in the table constitutes trades conducted by FPIs/FIIs upto the previous trading day.

Daily Trends in FPI Investments as on 21-Feb-2021 Reporting Date Debt/Equity Investment Route Net Investment (Rs Crore) Net Investment US($) million Exchange 981.53 134.95 Equity Primary market & others -49.83 -6.85 Sub-total 931.70 128.10 -672.03 -92.40 Debt Primary market & others 23.57 3.24 Sub-total -648.46 -89.16 22-Feb-21 Stock Exchange 123.86 17.03 Debt-VRR Primary market & others 9.93 1.37 Sub-total 133.79 18.40 Stock Exchange -68.19 -9.38 Primary market & others - - Hybrid Sub-total -68.19 -9.38 Total 348.84 47.96 Data Source: NSDL

RECAP – INTERNATIONAL

Currency Expiry Previous Open High Low Close Net Chng. % Chng. US Dollar Index 90.29 90.30 90.57 90.00 90.07 -0.22 -0.24% EURUSD 1.2117 1.2125 1.2170 1.2091 1.2164 0.0047 0.39% Spot GBPUSD 1.4014 1.4028 1.4086 1.3981 1.4067 0.0053 0.38% USDJPY 105.53 105.54 105.84 104.92 105.01 -0.52 -0.49% Data Source: Investing.com

The U.S. Dollar Index fell on Monday against the basket of currencies as traders focused on the promise of coronavirus vaccinations and the outlooks for economic growth and inflation that could push bond yields higher.

The dollar's latest retreat comes with spreading belief that the U.S. will go farther than necessary to support the economy with government spending and easy money policies and end up with too much inflation and too much additional debt.

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Currency Update

February 23, 2021

The Euro rose against the dollar on Monday after data showed that German business morale rose more than expected in February due notably to the country's resilient industrial sector.

The Pound rose against the dollar on Monday as investors bet on the UK's vaccination rollout bringing about an economic recovery and Prime Minister Boris Johnson set out a schedule for easing the lockdown.

The safe haven Yen ended stronger against the dollar on Monday.

OUTLOOK – DOMESTIC

The Indian Rupee could start this Tuesday on a flat to stronger note against the U.S. Dollar

Weak U.S. Dollar, strong Asian currencies and FPI flows into the markets could lend support.

The Rupee could likely open around 72.42-72.44 per dollar compared with 72.51 at close on Monday.

Meanwhile, NDF is at 72.42 this Tuesday morning vs a close of 72.39 on Monday.

Technically, the USDINR Spot pair ended on a negative note. However, the pair has bounced back from 72.27 and if the pair trades above the 72.50 again we could see some upside move upto 72.65-72.80 levels. Support is at 72.30-72.10 levels.

Pivot Points

Currency Expiry Close S3 S2 S1 Pivot R1 R2 R3 USDINR 72.47 72.01 72.17 72.32 72.47 72.62 72.78 72.93 EURINR 87.94 87.29 87.48 87.71 87.90 88.13 88.32 88.55 24-Feb-21 GBPINR 101.63 100.85 101.06 101.35 101.56 101.85 102.06 102.35 JPYINR 68.64 67.96 68.21 68.42 68.68 68.89 69.15 69.36 Data Source: NSE

Trend

Currency Exchange Daily Weekly Monthly 1 Week 1 Month YTD 1 Year 3 Years USD/INR Futures Continuous Bearish Bearish Bearish -0.43% -0.68% -1.09% 0.65% 11.96% EUR/INR Futures Continuous Bearish Bearish Bullish -0.66% -0.99% -2.21% 12.89% 10.49% NSE GBP/INR Futures Continuous Bullish Bullish Bullish 0.29% 1.95% 1.70% 9.47% 12.63% JPY/INR Futures Continuous Bearish Bearish Sideways -0.79% -2.49% -3.39% 6.07% 13.32% Data Source: Investing.com

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Currency Update

February 23, 2021

OUTLOOK – INTERNATIONAL

The U.S. Dollar Index has started weaker this Tuesday morning in Asian trade as investors' focus shifted to how U.S. Federal Reserve chief Jerome Powell might respond to resurgent inflation expectations.

Investors are eyeing the testimony of U.S. Federal Reserve Chairman Jerome Powell on the Semi-annual Monetary Report to Congress later tonight.

The Euro and the Sterling rose against the U.S. Dollar this Tuesday morning in Asian trade.

Meanwhile, across the Atlantic, investors will look to cues from inflation data from Europe.

The safe haven Japanese Yen has started stronger against the U.S. Dollar this Tuesday morning.

Pivot Points

Currency Expiry Close S3 S2 S1 Pivot R1 R2 R3 DXY 90.07 89.29 89.64 89.86 90.21 90.43 90.78 91.00 EURO 1.2164 1.2034 1.2063 1.2113 1.2142 1.2192 1.2221 1.2271 SPOT Sterling 1.4067 1.3898 1.3940 1.4003 1.4045 1.4108 1.4150 1.4213 Yen 105.01 103.75 104.34 104.67 105.26 105.59 106.18 106.51 Data Source: Investing.com

Trend

Currency Exchange Daily Weekly Monthly 1 Week 1 Month YTD 1 Year 3 Years US Dollar Index Bearish Bearish Bearish -0.58% -0.29% 0.05% -9.44% 0.11% EUR/USD Bullish Bullish Bullish 0.60% 0.08% -0.30% 12.19% -0.94% Spot GBP/USD Bullish Bullish Bullish 1.31% 2.92% 3.00% 8.94% 0.83% USD/JPY Bearish Sideways Bearish -1.03% 1.14% 1.69% -5.21% -1.81% Data Source: Investing.com

ECONOMIC CALENDAR

Date Time (IST) Country Relevance Indicator Name Period Poll Prior 12:30 Claimant Count Unem Chng Jan 35.0K 7.0k United Kingdom 12:30 ILO Unemployment Rate Dec 5.1% 5.0% 15:30 HICP Final MM Jan 0.2% 0.3% 23 Feb 2021 Euro Zone High 15:30 HICP Final YY Jan 0.9% 0.9% 20:30 Consumer Confidence Feb 90.0 89.3 United States 20:30 Fed Chair Powell Testimony Data Source: Investing.com

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Currency Update

February 23, 2021

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