The Indian rupee weakened past 78 against the US dollar, the lowest on record amid foreign fund outflows, firm crude oil prices, and general dollar strength. According to the RBI’s latest bulletin, potential portfolio outflows can average up to 3.2% of GDP or USD 100 billion in a year, and in a 'black swan' event comprising a combination of shocks, potential portfolio outflows can rise to 7.7% of GDP. Meanwhile, Brent crude futures are about 18% higher since Russia’s invasion of Ukraine and hit a 14-year high of almost $140 per barrel in March. Oil prices impact India’s current account deficit and trade balance significantly as India imports more than 80% of its oil needs. The dollar index has been trading above 104, close to 20-year highs as investors bet on even further Federal Reserve monetary tightening to bring decades-high inflation under control. In India, the central bank raise the policy repo rate by 50bps to 4.9% in June, still remaining below its pre-pandemic level.
Historically, the Indian Rupee reached an all time high of 78.39 in June of 2022. Indian Rupee - data, forecasts, historical chart - was last updated on June of 2022.
The Indian Rupee is expected to trade at 78.53 by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 80.33 in 12 months time.