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FxWirePro: Daily Commodity Tracker - 21st March, 2022 
The USD/INR is expected to head for the 67.0 level in the near future, while staying above the 66.5 support level, according to the latest report from Scotiabank. Further, the United States dollar index is expected to remain resilient given a surprise fall in the Eurozone inflation and to rise if US private wage growth for April accelerates.
The INR has recouped some losses recently despite continued bond outflows and a sustained rally in the DXY index. The NSDL data showed foreign investors pulled out a total net USD807 million of funds from Indian bond markets during the period from April 26 to May 2. In the meanwhile, however, the INR rallied 0.35 percent. It could be attributed to a buffer provided by the nation’s massive foreign reserves. India’s foreign currency stockpile dropped USD2.50 billion to USD423.58 billion in the week ended April 20 from a week earlier.
However, the RBI’s hawkish tone and future Fed rate hikes will continue weighing on INR-denominated bonds and the INR amidst rising oil prices, although the Indian central bank has relaxed rules for FPIs investing in local bonds.
Further, the RBI will remain worried about India’s elevated core inflation. Meanwhile, sound US fundamentals could spur and intensity market concern that the Fed will forecast total four 25 basis points rate hikes this year in the June "dot plot."
"Going forward, the 10-year U.S. Treasury yield is expected to resume its upward trend after recent correction and consolidation. Uncertainty surrounding the Iran nuclear deal could boost oil prices further in our view, which will then intensify market concern over India’s current account deficit," the report added.
Reuters reported on Friday morning that "Iran’s foreign minister said the US demands to change its 2015 nuclear agreement with world powers were unacceptable as a deadline set by President Donald Trump for Europeans to fix the deal loomed. Trump has all but decided to withdraw from the accord by May 12, sources said on Wednesday, though exactly how he will do so remain unclear".
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