The Indian Rupee is set to remain within the 80-83 range against the US Dollar. According to Economists at the Deutsche Bank, this will be as the Reserve Bank of India (RBI) will be involved in FX intervention.
The report by Deutsche Bank reads, ”We expect the RBI to be proactively involved in FX intervention, to keep Rupee broadly within the 80-83 range,
”though we don’t rule out intermittent and undershooting from time to time. We expect USD/INR to be around 82.50 levels by end-Dec’23,” it added.
As far as the need for replenishing FX reserves is considered, one potential positive could be if DXY continues to weaken meaningfully through 2023.
This can then add to valuation gains for INR and push up FX reserves (in contrast to the large valuation losses that have led to the depletion in India’s FX reserves in 2022).”
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