INR is likely to open around 70.80 as against yesterday’s close of 70.69 and between trade in a narrow range of 70.70 to 70.90.
The main overnight development was CNY and CNH trading below 7.0 as marketing expecting US and China to sign the trade deal in next few days. The positive sentiment is also seen in weakening of JPY and Swiss Franc.
In the local market, INR was stuck in a range as PSU banks were seen buying USD around 70.70 and absorb the dollar inflows from Bajaj Finance QIP. Even gains in CNY did not translate into INR gains. The range bound nature of INR in last few days suggests that 71 is a comfortable pivot and INR could hover in and around that for some time.
We continue to suggest to hedge near term imports around 70.30-70.50 and hedge long term exports around 70.80-71.10.