Year-to-date, INR is down 0.3% versus USD. Financial specialists at Commerzbank dissect Rupee’s standpoint.
RBI is supposed to leave rates unaltered until the end of the year
We project USD/INR to float down towards 81.50 by year-end. The fundamental reasons include: Proceeded areas of strength for with execution; Positive genuine loan costs. Since the peak of just under 8% in April 2022, inflation has steadily declined to an average of 5.8% this year. RBI has climbed by 250bp to 6.50% since May 2022. This infers positive genuine financing costs at around 70 bps; INR should also benefit from stable to falling oil prices and a stabilization in CNY volatility.
RBI is in a pensive mode and there is no motivator for an undeniable change in strategy at any point in the near future. In any case, RBI would have to remain watchful on food costs and will keep on watching out for the storm season.
