Indian Rupee declined 1.1% against the US Dollar last week. In the opinion of economists at MUFG Bank, INR could recover some ground in the next few days.

US data likely to be main driver

“As suggested by the recent October trade print, with persisting external sector risks, the INR is likely to remain under pressure due to potential even larger current account deficit and potential worsening yield spread between India and the US, as the degree of India’s rate hike likely smaller than US’s with its CPI inflation is approaching the upper bank of inflation target range.” 

“This week, no major data release for India, the release of US initial jobless claims, S&P global US manufacturing and services PMIs likely affect USD/INR movement.” 

“With US data likely strengthening the view of US’s growth deceleration, INR may recover a bit this week.”