RBI to continue to take a pragmatic approach to USD/INR - Commerzbank

Charlie Lay, analyst at Commerzbank, expects RBI to continue to take a pragmatic approach to USD-INR and allow it to find its own rate rather than target any particular level which was the policy in the past year.

Key Quotes

“We note the local equity market is at a record high and still up 15% over the past year but INR is at a near record low. USD-INR is just 7% off the record high of just below 74.50 reached in October-2018.”

“Subsequently, we have seen a steady build-up in FX reserves to USD422bn as of May-2019. This ensures India has sufficient ammunition to fend off potential speculators and to defend its currency if needed. Overall, we continue to look for a slightly higher USD-INR by year-end towards the 72 level.”