NEW DELHI — The Indian rupee is likely to remain under mild depreciation pressure in December, with the USD/INR pair expected to trade between 89 and 90 per dollar, according to a new report released Monday.
Bank of Baroda said movement in the currency will depend largely on progress toward a potential United States–India trade agreement, which could trigger sharper shifts in either direction. On the domestic front, the bank does not expect the Reserve Bank of India to cut rates at its upcoming meeting. It added that a U.S. Federal Reserve rate cut is already priced in by markets, suggesting limited room for major dollar swings unless the Fed surprises investors.
The report noted that neither the Fed’s decision nor the RBI’s Monetary Policy Committee outcome is likely to significantly affect the rupee, as the prevailing rate differential remains intact.
The rupee weakened 0.8 percent in November, closing the month at 89.46 despite India’s stronger-than-expected economic data. Bank of Baroda pointed out that the softness in the rupee appeared more notable given that the dollar itself declined during the same period.
India’s GDP growth for the July–September quarter came in at 8.2 percent year-on-year, up from 7.8 percent in the previous quarter and above economists’ estimates of 7.5 percent. Gross value added grew 8.1 percent, while nominal GDP expanded 8.7 percent.
Crisil Limited has revised India’s GDP growth forecast for the current fiscal year to 7 percent, up from an earlier estimate of 6.5 percent.
Markets have also re-priced expectations around U.S. monetary policy. The CME FedWatch tool now places the probability of a Fed rate cut in December at nearly 90 percent. (Source: IANS)
