USD/INR seen at 83.00 in 3 months and 81.50 in 12 months – MUFG

Economists at MUFG Bank remove their cautious view on the Indian Rupee (INR) and now see USD/INR at 81.50 by year-end – from 82.00 previously.

RBI to continue intervening to absorb FX inflows, limiting extent of INR appreciation

We think the balance of risks now tilt towards a stronger INR from here, and we remove our cautious view on INR.

We now forecast USD/INR at 83.00 in 3 months and 81.50 in 12 months (from 83.30 and 82.00 previously), and also continue to expect RBI to accumulate FX reserves through 2024, thereby limiting the extent of INR appreciation.

We think RBI will allow USD/INR to fall more once US Dollar weakness becomes clearer.