Standard Chartered maintains neutral short-term, overweight medium-term weightings on INR

Standard Chartered notes its views as follows....

• We scaled back our short-term weighting on the Indian rupee (INR) to Neutral from Overweight recently, but maintain our medium-term Overweight FX weighting. 
  
  
• We expect renewed volatility in capital inflows to emerging-market local-currency bonds in the short term as the Fed prepares to hike policy rates. 
  
  
• Market participants therefore risk getting caught long INR in the April-June period amid broad USD strength, ongoing RBI intervention and the lack of seasonal factors that supported the INR in Q1. 
  
  
• However, we expect portfolio inflows to remain robust in the medium term given improvements in the macro environment and high market expectations.