Fed remains on track to deliver more monetary easing measures, to undermine dollar in medium term: Scotiabank

The Federal Reserve remains on track to deliver more monetary easing measures that would undermine the dollar in the medium term, according to the latest research report from Scotiabank. The Fed’s dovish tone and falling implied USD/INR vols amid easing US-China trade tensions are supportive of the dollar-funded carry trade.

The RBI’s accommodative stance could boost Indian share prices further, prompting more equity inflows going forward. The NIFTY50 share index is likely to re-test the 12,000 mark, indicating further upside potential for the INR.

The Indian government has begun a fresh review for further liberalization of FDI sectoral caps as well as segments that are not on the automatic list to revive the investment cycle, according to The Economic Times.

In addition, India’s Department for Promotion of Industry and Internal Trade (DPIIT) is planning to set up a single-window system to attract foreign investors who are keen to invest in India. Improving external and domestic conditions are expected to provide support to the high-yielding INR as well.

India’s commerce and industry minister Piyush Goyal said on Monday that the India-US trade relationship is at its best and on the right track, and the two might announce a bilateral agreement, the report added.

Moreover, exit polls on Monday evening suggested continuation of the Bhartiya Janata Party (BJP) government in power in the state of Maharashtra and Haryana. The Election Commission will declare the results on Thursday, October 24.

"We would like to sell USD/INR at 70.9 now, with a target of 69.0 and a stop of 72.0; we keep a close eye on the nation’s fiscal conditions," Scotiabank further commented in the report.