- USD/INR could breach 84 in an extreme scenario which Dollar strengthens by 5% and Oil rallies to $110 – SocGen
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USD/INR could breach 84 in an extreme scenario which Dollar strengthens by 5% and Oil rallies to $110 – SocGen
Economists at Société Générale outline risk scenarios for the impact of higher Oil prices on the Indian Rupee (INR).
A combination of a higher Dollar and higher Oil prices is detrimental for INR
In the most bearish scenario, i.e. the Dollar strengthening by 5% and oil rallying to $110/bbl, USD/INR could breach the 84 level by the end of the year.
If the Dollar remains flat or if Oil prices remain flat, then USD/INR would probably remain at around 83.50, which has roughly been the resistance level since October last year.
The most probable outcome, based on SG forecasts, is for both the Oil price and the Dollar to remain roughly flat until the year-end. In this scenario, USD/INR would trade at around the 83 handle. We are sticking with this view but, owing to renewed upside risks to Oil prices, an outright short USD/INR doesn’t appear favourable.
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