India has bucked global trends for a weakening economy and is on track to grow by about 7% in 2023 and should achieve a similar growth rate in 2024.

The long-awaited turn in the USD should support the INR in 2024 but given how tightly the RBI has controlled the rupee since October 2022, the currency is already arguably stronger than justified relative to most of its peer currencies in the region, and we would anticipate a more modest appreciation during 2024 than its peers as a result.

We suspect the RBI’s FX control is asymmetric, and that it won’t prevent the INR from appreciating slightly in the first half of 2024.