USD/INR to drift down towards 81.50 by year-end

Year-to-date, INR is down 0.6% vs. USD. Economists at Commerzbank analyze Rupee’s outlook. An extended period of elevated Oil prices remains the bigge

st risk factor We project . The main reasons include: Continued strong economic performance. Positive real interest rates. Inflation has moderated steadily since the peak of just under 8% in April 2022 to an average of 5.8% so far this year.

RBI has hiked by 250 bps to 6.50% since May 2022. This implies positive real interest rates at around 70 bps. A stabilization in CNY volatility should also aid INR. However, an extended period of elevated Oil prices remains the biggest risk factor for INR. Source: Commerzbank Research

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