Indian rupee would appreciate little this year despite ongoing intervention by the RBI: Survey

Indian rupee would appreciate little this year despite ongoing intervention by the RBI: Survey

Indian rupee would appreciate little this year despite ongoing intervention by the RBI: Survey

Since the start of the year, the rupee has only increased by 0.2% vs the US dollar as demand for an early rate decrease by the US Federal Reserve has waned.

A Reuters poll predicts that despite a robust economy, the Reserve Bank of India will continue to interfere in the currency markets, meaning that the Indian rupee would stay range-bound and appreciate just little versus the US dollar in the next year.

Since the start of the year, the rupee has only increased by 0.2% vs the US dollar as demand for an early rate decrease by the US Federal Reserve has waned.

According to Tuesday's rate of 83.05 per dollar on 83.00 in a month and 82.84 in three months, the Indian rupee was predicted to appreciate somewhat, according to a Reuters poll of 42 foreign exchange experts conducted on February 2–6.

Even while the rupee has so far this year outpaced all of its main Asian competitors, by the end of January 2025, numerous currencies, including the Chinese yuan, Thai baht, and Korean won, are anticipated to register greater increases.

From a short-term standpoint, the rupee should keep moving within a narrow range. The USD/INR pair might see some upside from here, according to ANZ's FX analyst Dheeraj Nim.

The rupee could see a little decrease, but over time, a positive balance of payments and a final weakening of the dollar would open the door for a moderate increase.

The Fed's officials have firmly resisted cutting interest rates at first, which has delayed the long-awaited shift in the dollar's relative strength against other currencies.[EUR/POLL]

The rupee's relative strength may continue as the RBI is still generally anticipated to drop rates later this year, although much more slowly than the Fed.

There may be further background support from expectations that the third-largest economy in Asia would continue to expand at the quickest rate among major economies.

Even yet, any gains are probably going to be modest since the RBI is anticipated to keep hedging against volatility using its foreign currency reserves, which are now at $616.7 billion.

Within six months, the rupee was predicted to appreciate by over 0.6% to 82.50 versus the US dollar, and by 0.8% to 82.40 in a year. The range of predictions over the next 12 months was 79.00 to 84.50.

Due in part to JPMorgan's move to include debt in its index, foreign investors have made substantial inroads into India's bond markets in recent months.

Referring to the government bond index for emerging economies, Aditya Sharma, emerging markets strategist at NatWest economies, said, "Portfolio flows into India may be limited given JPMorgan's addition to the GBI-EM index this year and the lack of optimism on China." Needs to go on.

"Additionally, the RBI's FX operations are focused on suppressing volatility through broader USD moves."