Major developments:
USD is now at 74.31. USDINR opened at 74.26. Expected range: 74.15-74.35. Fed Chairman in his testimony to US Congress said that inflation is elevated and will remain so for some more period before moderating. He has now withdrawn word “transitory”. This is considered as mini taper tantrum. Soaring energy prices, steep container freight rates and rising consumption along with supply bottlenecks are likely to keep US inflation elevated. ECB is yet to recognise this problem and ECB Chief maintains that inflation is temporary.
US-EU inflation differentials is steep, warranting greater QE tapering by US. US Fed is now behind inflation curve and hence withdraw QE faster than anticipated before, possibly triggering higher USD.
-USDINR is at 74.31 .Prior day’s close was 74.15.
-Indian Equity indices decline marginally.
-Indian 10 year G-SEC yield is at 6.20%.
-USDINR 1 yr fwd premia is at 4.36%.
USDINR @ 74.31, EUR/USD 1.1607, GBP/USD @ 1.3449, USD/JPY @ 111.92, EUR/INR @ 86.24, GBP/INR @ 99.93, JPY/INR @ 66.40.
Gold@1732, WTI Crude @ 74.80, Nifty @ 17691(-20), 10 Year G-SEC @ 6.20%.
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