RBI has managed USD/INR in an 81.00-83.00 range since Q4 2022. RBI intervention at 83.00 should limit further USD/INR upside in the short term. However, there is risk that the RBI’s intervention level shifts higher (to 84.00) amid strong imports, economists at Credit Suisse report.

FX intervention and trade deficits will drive USD/INR

“In the short term, we expect central bank to continue defending the 83.00 level.” 

“In the medium term, we expect further rupee weakness and think the intervention level could shift higher to 84.00 in Q1. We remain optimistic on Indian GDP, but that optimism is negative for the trade balance and INR.” 

“We reiterate our view USD/INR Q1 forecast range of 81.00-84.00.”