Dollar-Rupee to trade at Rs 82-84 in H2 2024: CARE Valuations

CHENNAI: The US dollar to Indian rupee exchange rate will fluctuate between Rs 82 and Rs 84 in the second half of FY24, CARE Ratings said in a report.

According to the ratings agency, the rupee recently breached the Rs 83 mark against a dollar, but its decline was curbed by interventions by the Reserve Bank of India (RBI) in various markets, including the spot non-deliverable forward (NDF). . and futures markets.

“We expect the USD/INR exchange rate to fluctuate in the range of Rs 82-84 in the second half of fiscal 2023-24 and gradually approach the lower limit of this range. This forecast represents a shift from our previous forecast of Rs 81 to Rs 83,” CARE Ratings said.

The US Federal Reserve’s hawkish stance, communicated during the September meeting, is expected to continue to keep yields high in the US Treasury market and sustain the strength of the US Dollar Index (DXY) in the near term.

“However, we expect U.S. Treasury yields to weaken subsequently as the Federal Reserve signals that interest rates have peaked and as market participants reassess their interest rate expectations if signs of weakness in the U.S. Economy will become clearer in the broader economic indicators.” “said the rating agency.

The Chinese yuan’s weakness is expected to continue until China announces major stimulus measures, which will likely put downward pressure on the currencies of other emerging Asian markets.

Tight supply conditions are expected to keep oil prices high in the near term; Still, CARE Ratings expects oil prices to weaken in the absence of significant stimulus from China and economic growth in the United States begins to slow.

India’s current account deficit is forecast to remain manageable in FY24. Foreign portfolio investment (FPI) inflows are poised for a recovery, driven by robust economic fundamentals and the eventual weakening of US Treasury and DXY yields.

“Furthermore, we expect RBI’s interventions to continue and will serve to mitigate rupee volatility and imported inflation,” CARE Rating said.