BENGALURU: The Indian rupee will give up nearly all of its year-to-date gains against the dollar by the end of July as a slowing economy dampens investor sentiment and the Reserve Bank of India simultaneously loosens its grip on the currency’s movements, a Reuters poll of FX analysts found.
Supported by net capital inflows of around half a billion dollars from foreign investors into Indian equities in April the rupee gained more than 1% last month and was up more than 4% from a lifetime low of 87.95 per dollar set in February.
However, most FX analysts in an April 30-May 6 Reuters poll expected the rupee’s recent strength to fade soon as the economy was showing signs of a cyclical slowdown.
Indian rupee slips as Asia FX rally cools; correlation with yuan tightens
India’s economy, which grew 9.2% in the fiscal year 2023–24, was projected to have expanded at a slower pace of 6.3% in both the following fiscal year and the current one, a separate Reuters poll showed.
In three months the rupee was forecast 1.2% weaker than it currently is at 85.50 per dollar, down 2.2% at 86.30 in six months and then at 86.28 in a year, a trend similar to an April survey. It was up about 1.4% for the year against the greenback on Tuesday.
