Indian rupee to keep in a tight range amid constant RBI intervention: Reuters poll
Indian rupee will hew a close path to the U.S. dollar over the coming three months as regular interventions from the Reserve Bank of India keeps the currency on a tight leash, a Reuters poll of analysts found.
The RBI has kept the rupee in a narrow range against the dollar and is only down about 0.3% this year unlike most of its Asian peers which have weakened a lot more.
A recent drop in foreign exchange reserves to $640.33 billion, a six week low, shows the central bank has been selling dollars amid conflict in the Middle East and delayed expectations for rate cuts by the U.S. Federal Reserve.
«Given the heavy-handed nature of the RBI's intervention, we expect volatility to remain contained. We may see the RBI put a firm floor under the USD/INR pair,» said Abhishek Goenka of India Forex and Asset Management.
Goenka added: «the Fed rate hikes getting pushed out on the stronger U.S. data seems to already be in the price.»
The rupee, trading around 83.47/$ on Thursday, was forecast to change hands about that level in a month and then strengthen to 83.29/$ in three months, the April 29-May 2 Reuters poll of 46 foreign exchange analysts showed.
The Fed reiterated its «higher for longer» message at its recent meeting, suggesting resilient activity and inflation data have delayed considering rate cuts. The RBI is still widely expected to cut rates next quarter.
Meanwhile, the Indian economy will remain the fastest growing major economy, helping the rupee in the long run.
The currency was forecast to gain around
