Halister News

(Bloomberg) -- USD/INR has traded in a tight range of 66.50-67.00 which should be broken on the downside as lower money supply should allow INR to appreciate in the next few sessions, Amit Agrawal, strategist at Societe Generale, writes in note

• INR’s relative appreciation against the rest of Asia FX complex can be in the range of 1%-2% over next few days depending on the U.S. election results
• Estimates cash in circulation from the existing 500 rupee and 1,000 rupee note is close to 14t rupees, comprising around 86% of the total; some of the cash may not go back to the market to avoid attention of the authorities and will lower the money supply
• Banking system liquidity would increase, pushing the short end of the rates curve lower; banks may use the cash to buy bonds when loan growth is low and it should help the yield curve to move lower
• USD/INR rises 0.3% to 66.8200
• Yield on 10-year bond drops 12bps to 6.678%
• NOTE: India withdraws high-denomination bills in graft crackdown