According to analysts at Wells Fargo, the Indian rupee will gradually depreciate versus the US dollar over the next quarters. They forecast USD/INR at 74.25 by the fourth quarter, and at 74.50 by the second quarter of next year. 

Key Quotes: 

“India's economy continues to demonstrate a rebound; however, we maintain our view that the rupee will gradually depreciate over the course of our forecast horizon. The Q2 slowdown in India's economy was severe, although high frequency indicators of mobility and activity are back above pre-pandemic and pre-second wave of infections levels.” Given the rebound, we forecast India's economy to rebound sharply in Q3, though we still believe the economy is fragile.”

“As a result of a fragile economy, we expect the Reserve Bank of India (RBI) to keep monetary policy accommodative over the course of our forecast horizon in an effort to prioritize growth. Accommodative monetary policy through 2022 should keep depreciation pressure on the rupee for the time being, especially as peer emerging market central banks continue to raise interest rates. Modest inflationary pressures should also provide justification for the RBI to keep interest rates on hold.”

“We also expect the RBI to intervene in FX markets in favor of a weaker rupee in an effort to support India's export sector and the broader economy. As the RBI grows its FX reserve position the rupee should weaken; however, as mentioned, we forecast any softness in the currency to be relatively gradual in nature.”
 

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

GBP/USD holds above 1.2100 after UK inflation data

GBP/USD holds above 1.2100 after UK inflation data

GBP/USD trades in positive territory above 1.2100 in the early European session on Wednesday as investors assess the latest inflation data from the UK. On a yearly basis, the CPI climbed to 10.1% in July from 9.4% in June, surpassing the market expectation of 9.8%.

GBP/USD News

EUR/USD consolidates gains below 1.0200 ahead of EU GDP, Fed minutes

EUR/USD consolidates gains below 1.0200 ahead of EU GDP, Fed minutes

EUR/USD consolidates the rebound below 1.0200 amid a cautiously optimistic mood. US dollar extends the pullback ahead of Fed minutes while the euro awaits Eurozone GDP. The shared currency remains weighed down by recession fears and gas crises.

EUR/USD News

Gold’s battle with 50 DMA extends ahead of Fed minutes

Gold’s battle with 50 DMA extends ahead of Fed minutes

Gold price rebounds from weekly lows as the USD resumes correction. US Treasury yields are struggling to find demand ahead of the Fed minutes. XAU/USD needs acceptance above 50 DMA to sustain the recovery.  

Gold News

Solana price hints at a 50% upswing under these specific conditions

Solana price hints at a 50% upswing under these specific conditions

Solana price shows an interesting setup as it tries to overcome a stiff resistance level. The fifth attempt to overcome hurdles will likely be successful due to multiple bullish confluences. Solana price has been on a clear uptrend since producing the June 14 swing low at $25.76.

Read more

FXStreet Premium users exceed expectations

FXStreet Premium users exceed expectations

Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!

BECOME PREMIUM

Forex MAJORS

Cryptocurrencies

Signatures