We expect the Rupee to appreciate on the back of a softer US Dollar by the end of 2023 and an overall balance of payment surplus in FY24. However, we expect these gains to be limited, as the RBI will likely build its FX reserves further. 

Using its two-way intervention, the RBI has lowered the INR’s volatility, which in the face of Dollar softness, has led to a depreciating nominal effective exchange rate. This, in our view, ties well with the government’s manufacturing and export campaigns. However, with lowered volatility and stable macro conditions, INR offers a decent carry play in the Asian complex.

USD/INR (end of period) – 2023 81 2024 79.30 2025 79