Indian Rupee was the second worst performer vs USD in 2022, behind only the Yen. Economists at Commerzbank look for a stable to slightly firmer INR in 2023.

RBI nearing end of hike cycle

“The RBI is expected to tighten policy further by another 30-50 bps in the next six months. Nevertheless, RBI is nearing the end of its tightening cycle.”

“Inflation is expected to have averaged 6.8% in 2022. RBI is projecting inflation to dip below 6% in Q1 2023 but it is expected to hold at around 5% in 2023. This should pave the way for RBI to pause rate hikes but not enough to cause them to cut.”

“We look for a stable to lower USD/INR in 2023 at 81.50 by year-end.”