Indian Rupee To Trade In Tight Range As RBI Keeps Intervening

The Indian rupee is expected to undergo limited fluctuations in the upcoming months due to ongoing interventions by the Reserve Bank of India (RBI) aimed at shielding the currency from the impact of a strong U.S. dollar, as per findings from a Reuters poll featuring foreign exchange analysts. Despite most emerging market currencies experiencing challenges from the “higher-for-longer” rates narrative, which has led U.S. yields to multi-year highs, the rupee has shown minimal movement, with less than a 1% decline recorded for the year. However, it has consistently hovered near its historic low of 83.29 against the dollar, with certain traders betting against Asian currencies.


The rupee, which suffered a decline of over 10% in 2022, has seen a marginal 0.2% gain this year, and prospects for a swift recovery seem unlikely despite India’s continued status as the world’s fastest-growing large economy. A survey conducted among 45 foreign exchange strategists from July 31 to August 2 predicts that the rupee will maintain stability. Over the subsequent six months, a modest strengthening of approximately 1% is projected, bringing the exchange rate to 81.67.

Median forecasts derived from a poll conducted between October 2-4 by 46 strategists indicate a slight gain for the rupee, with an anticipated trading value of approximately 83.00 per dollar in both one and three months, in contrast to the approximately 83.24 per dollar on Wednesday. These projections are slightly weaker than the figures of 82.88 per dollar and 82.75 per dollar forecasted for the corresponding one- and three-month periods in September. Robert Carnell, the regional head of research, Asia Pacific at ING, noted that the limited movement of the rupee suggests significant management within a narrow range by the RBI, potentially unrelated to fundamental economic factors.

The narrative of a “higher-for-longer” U.S. dollar has gained prominence, influencing the outlook for all foreign exchange against the U.S. dollar. The RBI’s foreign exchange reserves, reported at $590.7 billion as of September 22, decreased to a four-month low, and the potential for further depletion is evident due to the significant surge in oil prices, a major import for India. The likelihood of the rupee reaching a new record low within a year is suggested by over 60% of analysts (29 out of 46), particularly given the recent substantial increase in oil prices, reaching nearly $98 per barrel last week. Dhiraj Nim, an FX strategist at ANZ, envisions a confined near-term range for USD/INR due to dollar strength and volatile crude oil prices. However, he anticipates modest appreciation over the next 12 months as balance of payments fundamentals improve and U.S. dollar pressures ease. The rupee is forecasted to gain less than 1%, reaching 82.50 per dollar within a year.