INR closes at record low @74.40. We now see a possibility of 77-78 in coming weeks. A short lived technical correction towards 73.80 is not ruled out.
We think that factors affecting INR weakness are only becoming more stronger. For example, capital outflows from India have picked pace as US yields continue to rise.
Just within 9 days of Oct, FII outflow from equity has been USD 1.4 Bn which is higher than outflow in entire Sept. (Refer table). In Sept, we saw a weakness of Rs 3/ USD. As of now debt outflow is muted and if that also picks pace (likely to happen), INR weakness could also pick pace.
Suggest to wait for export hedging and keep hedging imports using mix of forwards and plain call options.
