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USD/INR: The Indian rupee will depreciate moderately — MUFG

According to MUFG Bank analysts, The Indian rupee is likely to depreciate moderately due to the possible strengthening of the US dollar in the near term. They anticipate that the USD/INR it stands at 82,300 by the end of the first quarter of next year and 80,500 by the third quarter.

Notable Statements:

“Following gains in most emerging Asia, the INR rose slightly last month along with a slight gain in India’s stock market, with the benchmark BSE Sensex index rising 3.2% to 62,858, already that foreigners bought $3.11 billion worth of Indian shares in November. Easing crude oil prices also offered some support to the currency.”

“The Reserve Bank of India (RBI) is likely to hike the benchmark repo rate by 50 basis points at its next meeting on December 7 to further contain inflationary pressures. As inflation moderates further and falls in the central bank’s target range, the RBI will likely hold rates steady for a while and shift some focus to growth.”

“In the short term, we see that fundamentals such as Fed rate hikes, a stronger US dollar, trade deficits, and India’s widening fiscal deficits are likely to weigh on the INR, and the China factor could also weigh.” adding volatility to USD/INR movements Strengthening INR will likely come as the Fed pivots and the US dollar begins to weaken in Q2 2023. We expect USD/INR to end this year at 82,000, and the next at 79,800.”

Source: Fx Street

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