The USD/INR retraced the highs of 45.28 and has settled at around 45.78 levels. Equity markets were directionless with the Sensex and the Nifty closing a tad lower than last week. The high point from the data point was the 11.3 % growth in IIP against expectation of 10%. Inflation for the month of December was 7.31% which was as per expectation. In Euro news, the ECB kept rates unchanged but reiterated the need for fiscal discipline from its member states. While we expect the USD/INR to be more weighed by foreign inflows and underlying strength of the Indian economy, momentary surges in the US dollars may take the pair back above 46 levels.

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