USD/INR: Upside risks from outflows and AI concerns – MUFG
|MUFG’s Lin Li, Michael Wan, Lloyd Chan and Khang Sek Lee note that India’s fourth‑quarter GDP is expected to slow on weaker exports, though domestic demand remains resilient. From an FX angle, they see the Rupee pressured by capital outflows and sector concerns, projecting USD/INR to move higher over the medium term with some possible March relief.
Rupee pressured by flows and sentiment
"Elsewhere in Asia, India’s fourth‑quarter GDP is projected to slow with softer export growth driven by the lagged impact of tariffs, but supported by resilient domestic demand."
"From an FX perspective, INR remains on the backfoot given continued capital outflows driven by the PE/VC exit cycle, still soft FII inflows despite the recent trade deal and also recent concerns around the impact of AI on India’s IT services sector."
"We see USD/INR rising towards the 93.00 handle over the medium-term, although some near-term relief in March could be possible on better seasonality and some expected inflows."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.