The Indian Rupee (INR) was marginally stronger against the US Dollar (USD) in January. Economists at MUFG Bank analyze USD/INR outlook.

USD/INR to fall towards the 82.00 level in the second half of the year

We expect the INR to benefit from strong capital inflows from bond index inclusion in 2024, while RBI intervenes to absorb flows, thereby limiting the extent of INR appreciation.

In the near term in Q1 2024, we think that USD/INR should hover around the 83.00 level as the RBI rebuilds FX reserves before falling more convincingly towards the 82.00 level as the broader Dollar weakens in 2H 2024.