With the RBI on hold and the Fed likely to deliver another 25 bps hike in May, economists at Wells Fargo expect the Rupee to continue moving sideways in the short-term. Over the longerterm, an aggressive Fed easing cycle and broad-based USD depreciation should lead to INR strength.

Stable Rupee through Q2-2023

“With the RBI on hold and the Fed likely to deliver one last 25 bps hike in May, diverging paths for Fed-RBI monetary policy combined with lingering uncertainties should result in a stable Rupee through Q2-2023. We forecast the USD/INR exchange rate to hover near 82.25 through the end of the second quarter.”

“We believe the Federal Reserve is likely to lower interest rates at an aggressive pace starting in Q4 of this year, which should result in broad-based US Dollar weakness. This greenback depreciation should facilitate Indian Rupee strength over the medium-to-longer term, and we target a USD/INR exchange rate of 81.00 by the end of 2023 and 79.50 by the middle of 2024.”