Indian rupee range bound in near term, to rise a bit in a year

economictimes.indiatimes.com:

rupee will hold on to its recent gains against the dollar in coming months and strengthen marginally in a year, on strong macroeconomic trends and expectations the U.S. Federal Reserve is nearing the end of its hiking cycle, a Reuters poll showed. Despite the Reserve Bank of India (RBI) ending an already-modest rate hiking cycle well before many of its peers, the rupee is up nearly 1% for the year on large foreign capital inflows in a brightening economic outlook.

Asia's third-largest economy was expected to grow 6.1% this fiscal year, a separate Reuters poll showed, making it the fastest-growing large economy in the world. While regular interventions from the RBI have prevented the rupee from sliding, they have also stopped the currency from strengthening too much, leaving it trading in a tight range of 80.88-82.95 this year. Median forecasts in the July 3-5 poll of 40 strategists showed the rupee will trade at 82.00/dollar in one and three months, 81.80/dollar in six months and 81.00/dollar in a year.

That outlook is largely unchanged from last month. The rupee was trading around 82.22/dollar on Wednesday. «It mainly boils down to where the RBI will want the rupee to settle… last year the RBI spent a lot of reserves defending 80.00/dollar levels and they would not want those levels to be breached easily, even if the dollar weakens,» said Abhishek Upadhyay, senior economist at ICICI Securities.