PHOTO
The Indian rupee (INR) is set to average INR76.00/USD in 2022, said Fitch Solutions in a new report. This is slightly stronger when compared with their previous forecast of INR76.50/USD.
"This suggests broadly sideways trading over the coming quarters but with a slight bias for depreciation from the average of INR73.90/USD thus far in 2021," Fitch said in the report.
Over the longer period, Fitch expects this weakening bias to continue and forecasts an average of INR78.00/USD in 2023, after range-trading between INR72.40/USD and INR76.80/ USD over the coming months.
However, the depreciation will be gradual given still-strong economic fundamentals, the report pointed out. According to Fitch estimates, the Indian economy will continue to grow. Real GDP came in at 10.4 percent q-o-q and by 8.4 percent y-o-y in Q2FY22 (July-September), which is in line with market expectations of 8.4 percent y-o-y and points to a strong growth outturn of 8.6 percent for FY2021/22.
Moreover, inflation--at 4.9 percent y-o-y in November--though above the central bank’s mid target of 4.0 percent, it is still below the upper band target of 6 percent.
A decline in oil prices from $85.66 per barrel (/bbl) in late October to $72.41/bbl in late December has led to an improvement in the country’s terms of trade, which should provide some support for currency, the report said.
On Tuesday, the rupee was trading at INR74.89/USD. For the Indian expatriates in the UAE, the rupee is trading at INR20.39/AED.
(Reporting by Brinda Darasha; editing by Seban Scaria)
Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.
© ZAWYA 2021
