Thread by @AnkitMadX

#USDINR
Thread..

Pros:
1. Multifold Inflows ~= Outflows (of Tr Def & CA def).
2. RBI appetite for reserves reducing
3. Weak DXY
4. Hand of God levels (73-74)

Cons:
1. Crude 73+
2. Inflation > 6% yet MPC stance accommodative
3. GDP growth 🤞 (8-9% over 2020 which is ~ to 2019)

4. Tr def, CA def.
5. Fiscal deficit
6. Rising commodity prices headwind for govt spending

Thoughts:
1. Reserves of over $150 Bn added within 24m
2. Avg cost 72-73
3. Appreciation contained, however one off one time Depn is tolerated
4. inflation counter by keeping ₹ stable?

5. Are we forming base at 73 for the next band at 75-78 from current band of 73-75 levels if,
Crude > 73
DXY > 92 (taper)
Inflation > 6 (with accom)
Growth < 9%
Fisc > 8%

6. Conversely, 73 is difficult to hold if,

FED shrugs taper
Inflation is transitory
Fisc ~ 7-8

Growth is per expctn
Crude < 70
Commodities cool off

6. Decoupling from China

#CNYINR #USDCNH level of 11.50~ hv been new normal post pandemic vs 10.50/75 prior to pandemic.

Discourages imports at the same time imports inflation since there no credible alternative.
🤞🤞🤞
End.

@DEVENDRACHATUR1 @Macro_Maniac_ @mosesharding @SergiLanauIIF @sunchartist @dugalira @macroguru9 @DSWINDIA @TraderClassy @vinitrahtod @ForexLive
Views / Inputs welcome.