Indian Rupee: Gradual strengthening path outlined – MUFG
MUFG’s Michael Wan expects USD/INR to grind lower over the next 3–6 months towards 94.00, before rebounding to 96.00 in the next calendar year.
MUFG’s Michael Wan predicts that the USD/INR will gradually weaken over the next 3–6 months, potentially reaching 94.00, before rising to 96.00 in the following year. The forecast is based on stronger dollar inflows from the RBI’s foreign exchange measures, offset by repatriation outflows from IPO-related foreign direct investment and limited potential for significant INR strength.
The bank anticipates a substantial increase in inflows from the RBI’s FX measures, estimating US$87bn from US$60bn previously, with the majority occurring in the September quarter. However, the increased FDI repatriation outflows are expected to counterbalance the gains from stronger dollar inflows. Therefore, MUFG projects a downward trend for USD/INR towards 94.00 over the next 3–6 months, followed by a rebound to the 96.00 range in the next calendar year.
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