We remain cautious on INR in the near-term, and keep our USD/INR forecast at 83.70 in 3M and 82.00 in 12M, with USD/INR likely to trade in a higher range of between 82 and 84.

We are positive over the medium-term picture for capital flows in India. We saw good progress on disinflation, but upside risks remain given the weak monsoon.

We expect RBI to remain hawkish, and continue to see the 1st cut starting the Sep 2024 quarter. RBI has continued to be aggressive in intervening to guard against currency weakness amidst capital outflows.