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Below is quote on Evening Currency Update  01 February 2022 by Anindya Banerjee, DVP, Currency Derivatives & Interest Rate Derivatives, Kotak Securities

USDINR converged with Bond yields but diverged from Nifty as the Union Budget was presented. 10-year bond yields were up 14 bps at 6.82 and the USDINR spot was up 17 paise at 74.80. The Union Budget offered a roadmap of continued strong CAPEX and reforms which should allow the nation to quality high growth. However, the same Budget was silent on withholding tax for FPIs and overshot on the gross market borrowing number. Traders were expecting FM to announce an amendment to taxes which is seen as a key step towards including GOIsecs in the global bond indices. We expected it to happen eventually but for now, the market was disappointed, especially when gross borrowing was close to 15 lakh crores, much higher than the consensus call of around 12.5 lakh crores. However, that may have been absorbed if FM announced the tax changes but that did not happen. Yields hardened and the Rupee weakened. Over the near term, USDINR may operate within a range of 74.40 and 75.20 on spot.

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