The Indian rupee is projected to experience modest strengthening against the US dollar in the next three months. The Reserve Bank of India (RBI) is expected to utilise its foreign exchange reserves to manage volatility and maintain the rupee’s relative strength.
While most emerging market currencies have weakened against the dollar this year, the rupee has remained relatively stable. The RBI’s intervention in foreign exchange markets has contributed to this stability, with its reserves reaching record levels.
Analysts anticipate the rupee to appreciate slightly to 83.11/$ in a month and 82.90/$ in three months. This outlook has persisted for several months and is unaffected by the dollar’s current strength. In June, the US Federal Reserve is expected to start reducing borrowing costs, while the RBI is expected to maintain its repo rate this week.
However, given the US economy’s continued growth, there’s an increasing chance that the Fed will postpone or cancel rate decreases earlier than expected, which might temporarily strengthen the US dollar. Still, it is predicted that the rupee will appreciate by about 1.1% to 82.50/$ in six months and by about 1.7% to 82.00/$ in a year.
