Madhumita Gokhale
BENGALURU (Reuters) – The Indian rupee, the worst performing Asian currency last year, is expected to fall further in the coming months and trade near current levels in the next 12 months. Forex strategist.
After falling more than 10% in 2022, the rupee has traded between 80.88 and 82.95 per dollar this year, trading just above 82.10 on Tuesday. It was expected to stay in that range over the forecast range.
The median forecast from 40 respondents to a Reuters poll from March 31 to April 4 showed the rupee trading at $82.40/$ by the end of the month and at $82.55/$ by the end of June. rice field. It is projected to rise to 81.50/$ after 12 months.
However, a fifth of respondents expect the currency to change below $1 to $82.90 as early as next month.
The majority of poll respondents, 13 out of 16, who responded to additional questions said the risks to their forecasts were skewed towards further weakening of the rupee over the next month.
The rupee gained 0.6% last month as most currencies eased somewhat as the US Federal Reserve indicated it was nearing the end of its historically aggressive tightening cycle. But polls predict the currency will come under pressure again.
“The Fed may hike rates again in May, which is supporting the dollar,” said Sakshi Gupta, principal economist for India at HDFC Bank.
The Reserve Bank of India (RBI) has raised repo rates much lower than the Fed during this cycle, but it also has less room to cut borrowing costs over the forecast period, Gupta said.
“Thus, the yield spread and yield-seeking behavior may attract some flows to India,” she said, referring to the second half of the forecast period.
The partially convertible rupee, which has fallen in nine out of the last ten years, hit a historic low of 83.26 last October, forcing the RBI to intervene.
At $578.78 billion, the RBI has enough firepower to continue its interventions to prevent excessive volatility, despite depleting billions of dollars in foreign exchange reserves last year to counter the strength of the dollar. I have.
That is another reason the currency is likely to stick to a range.
“The RBI’s FX intervention strategy will continue to be the main driver of the Indian rupee,” said Lin Li, head of global market research Asia at MUFG. “In our view, the RBI does not seem to like excessive FX volatility, especially when driven (in both directions) by portfolio flows.”
(For more stories from the April Reuters Forex Poll:)
(Reporting by Madhumita Gokhale, Poll by Anant Chandak and Veronica Khongwir, Editing by Ross Finley and Conor Humphries)
