As per a senior economist at CARE Ratings, the Indian rupee is likely to appreciate to around Rs 82–82.50 in FY25. But in the near term, it will oscillate between Rs 83–83.50 against the US dollar. Chief Economist Rajini Sinha said that the INR's marginal appreciation in FY25 is likely on the back of robust fundamentals of India such as a healthy economic growth of around 7 percent, comfortable current account deficit at about 1 percent of GDP, and an expected increase in foreign portfolio investment inflows after India's inclusion in global bond indices.
Despite a slight easing of concern over Iran–Israel tension, emerging market currencies, including the Indian rupee, continued to face the impact of the strength of the US dollar. The chief economist said that the rupee stayed relatively strong compared to some emerging markets and Asian peers this year. However, it could be due to interventions by the Reserve Bank of India.
Recent economic data and inflation figures that crossed the expectations in the US have reduced market expectations for the US Fed's rate cuts, Sinha added. She also said that a change in Fed officials' sentiment from a more dovish stance to a more hawkish stance has taken place.
Looking ahead, Sinha said the market has held on to the expectation of a release of US GDP data and personal consumption expenditure inflation data. The US economy is likely to be resilient, he added, but any sudden reveals in the data would cause a change in market participants' expectations regarding the Federal Reserve's rate cuts.
Read also | India Records 455 Deals Valued at $25.6 Billion in First Quarter of the Year: Report
Read also | Axis Bank Records Net Profit of Rs 7,130 Crore in January-March Quarter
