USD/INR: Likely to peak at 83.00 during Q1 – MUFG
02.03.2023, 19:59

USD/INR: Likely to peak at 83.00 during Q1 – MUFG

Analysts at MUFG Bank see the Indian rupee starting a recovery during the second quarter. They forecast the USD/INR pair at 83.00 by the end of the first quarter and at 80.50 by the third quarter.

Key Quotes:

“The rupee tracked losses of Asian currencies amid a stronger US dollar fuelled by expectations of more Fed rate hikes, but its decline was milder compared to regional peers, thanks to improving macroeconomic numbers. India’s trade deficit narrowed (more than expected) to USD17.75 billion in January from a deficit of USD23.77 billion in December. Also, lower crude oil prices offered some support the INR as well.”

“Heading into March, we continue to expect a play of the theme of Fed policy in near term and so the headwinds remain for INR. On the fundamental basis, India’s GDP growth in the October-December quarter is expected to slow from 6.3%yoy in the prior quarter amid weakening demand, adding further selling pressure to the currency. We expect USD/INR to rise to 83.00 by end-Q1. INR will receive some boost in the period between Q2 and Q4 due to a weakening US dollar and India’s relative better economic performance.”

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