INR/USD Outlook:
Slightly positive, but likely to move sideways, as the rate is just below its 90-day average and remains within a stable range.
Key drivers:
• Rate gap: The narrowing interest rate gap between the Reserve Bank of India and the Federal Reserve is influencing the INR's value.
• Risk/commodities: The persistent high prices of crude oil are impacting India's current account deficit, putting pressure on the INR.
• One macro factor: Weak manufacturing export growth is creating challenges for the Indian economy, further affecting the rupee.
Range:
The INR/USD is likely to hold within its recent trading range as external pressures and domestic factors create a stable yet uncertain environment.
What could change it:
• Upside risk: A positive shift in global risk appetite could enhance demand for emerging market currencies, including the INR.
• Downside risk: Increased FPI outflows due to geopolitical tensions could lead to further depreciation of the INR.
