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USD/INR: Strong growth backdrop and stable interest rates help stabilize the Rrupee – Commerzbank

USD/INR returns to the lower part of the range from the beginning of the year of 82.70-83.50. Commerzbank economists analyze the pair's prospects.

Continuation of strong growth momentum

The latest preliminary manufacturing and services PMI reports from S&P Global continue to point to strong economic momentum. The February manufacturing PMI rose to 56.7 from 56.5 in January. The services PMI also rose slightly to 62, from 61.8 previously. Both are well above the threshold of 50, especially services.

Looking at forward-looking indicators, such as new orders, there are no signs of a short-term slowdown either.

For the Reserve Bank of India (RBI), this is all good news. The economy remains strong and headline inflation is expected to remain below the upper limit of the 2%-6% target band. The strong growth backdrop and stable interest rates are also helping to stabilize the INR.

Source: Fx Street

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