Economists at Credit Suisse think that the Reserve Bank of India (RBI) will maintain a “weak rupee” policy. Therefore, in the short-term, the RBI will limit rupee weakness to the 78 level per dollar.
RBI will eventually allow the 78 level to break
“We think that strong Indian consumption and imports will continue to put weakening pressure on the rupee, while the RBI’s ‘permitted’ USD/INR trading range (currently 76-78) will shift higher. Still, in the short-term, we think the RBI will limit rupee weakness to the 78 level in USD/INR.”
“We expect the central bank will eventually allow the 78 level to break sometime in June-July. Thereafter, we expect a USD/INR trading range of 78-80.”