Debt Mutual Fund Strategy

32 22 Confidential/Restricted Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 -12 -16 -20 -24 -28 -32 Source:- Bloomberg -4 -8 404 ∞ Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Forex Reserves (USD Bn) 30 640 620 600 580 540 520 500 ៖ ៩ ៖ ៖ ៖ ៖ ឱ ន 25 20 Since the start of FY23, Forex Reserves have declined 15 560 by ~USD 82 bn, following RBI's aggressive intervention in Forex Markets to ensure stability of the exchange rate. 10 5 Source: Bloomberg Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 0 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Declining Forex Reserves amidst strengthening US Dollar remains a key monitorable for Bond Markets... US Dollar Index Trade Balance (USD Bn) 120 70 Trade Deficit continued to be high while improving marginally in September 2022 The US Dollar Index continues to show strength. 115 110 The US GDP rebounding in Q3CY22, may signal resilience of the economy. 75 105 100 95 80 90 Jul-22 85 80 source:- Bloomberg Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 85 Source:- Bloomberg Jan-21 Feb-21 Mar-21 May-21 Jun-21 Jul-21 Classification - Restricted Source:- RBI * Approximate Import Cover* Import Cover declined sharply from ~10 months at the start of FY23 to 8 months as of October 2022. Here Import Cover is calculated by Dividing current Forex Reserves by the Imports for the month Currently, the INR seems to be relatively better placed than some of the Emerging markets in terms of contained inflation, a positive growth differential with its peers, and low external sovereign debt. ■That said the INR could remain under pressure given the global economic uncertainty. The RBI has been so far successful in ensuring an orderly depreciation of the Rupee and is likely to continue doing so. ■This would mean further drawdown on the Forex Reserves. ■ Thus the level of Forex Reserves, movement in USD, and India's Balance of Payments remain key monitorables. Sep-22 HDFC BANK RESEARCH Classification - Restricted HDFC BANK We understand your world Aug-21 Oct-21 Nov-21 Dec-21 Feb-22 Mar-22 Apr-22 Jun-22 Jul-22 Aug-22 Oct-22 INR/USD Exchange Rate

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