During February the Indian rupee weakened against the US dollar from 74.618 to 75.333. In the view of economists at MUFG Bank, Downside risks are building for the rupee in the year ahead.

Backdrop of global risk aversion and higher oil prices are negative for INR

“The global backdrop of risk aversion due to Russia’s invasion of Ukraine, the surge in Brent crude oil prices to levels above $100/bbl, and upcoming policy tightening by the Fed are major factors that will undermine the rupee.”

“We expect USD/INR to head higher with our end-2022 forecast at 77.50, which is above the record high of 76.92 recorded in April 2020.”