Reserve Bank of India (RBI) to maintain prudent stance on monetary policy. In the opinion of Wells Fargo economists, delayed easing should support Indian Rupee (INR) over time.
Local politics should be a source of strength for the INR
Patient and prudent monetary policy by the Reserve Bank of India should support the Indian Rupee in the long term. Federal Reserve likely to cut interest rates before Reserve Bank of Indiawhich should support the Rupee through more attractive interest rate differentials.
In our opinion, a victory for Modi with a majority in the Lok Sabha would allow wide-ranging political continuity and the continuation of reforms aimed at integrating India into the global economy and its financial markets into the global financial system. Policy continuity should attract capital and debt flows to India and support the Rupee.
Finally, strong economic performance, fiscal responsibility and debt consolidation, as well as declining political risk, should serve as a basis for credit rating agencies to upgrade Indian sovereign debt ratings.
We see opportunities for the Rupee to strengthen in the long term. Regarding our long-term prospects, we believe that the USD/INR exchange rate can strengthen to 82.00 by the end of 2024 and we believe that the foundation for Rupee strength will persist until 2025. By the middle of next year, we believe that the USD/INR can move towards 81.00.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
