The Rupee could remain rangebound, tied to global risk mood swings and the RBI’s intervention, economists at ANZ Bank report.

Lower oil prices and narrowing trade deficit could keep INR supported over the medium term

“The Rupee remains tied to global risk sentiment, and financial flows have exhibited weakness amid market uncertainty.”

“Near-term turbulences aside, lower crude oil prices and a narrowing trade deficit could keep INR supported over the medium term. However, we expect limited appreciation in INR this year despite a softer Dollar because once inflows resume, the RBI will prefer to build back its FX reserves, a large part of which it expended in 2022.”

“On a REER basis, the Rupee also looks fairly valued.”