Forecasts for the Indian rupee change all the time, affected by news events and relative sentiment towards the Indian economy. This continually updated article reviews the latest forecasts from banks and FX experts as well as news and recent movements of INR in the currency markets.
Most Asian currencies weakened in 2021 (including the rupee) against the dollar on fears that surging energy prices could spur inflation and interest rate hikes.
India imports most of its oil requirements and higher crude prices tend to push up domestic inflation.
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Before this pivot by the Fed Reserve the Reserve Bank of India’s announcement of a huge government bond purchase programme in April ended the Indian rupee’s resilience to U.S. dollar strength and other currencies such as GBP and AUD.
The Indian rupee was Asia’s worse performing currency in 2020, but compared to previous crises performed relatively well.
Migrant workers from Asia’s developing countries, such as India, have been sending home record amounts of money in recent months, defying pandemic expectations and propping up home economies at a critical time.
However, it appears workers are just sending money home in advance of their own return due to a bleak job market, particularly in the Middle East.
INR did gain more than 2% in 3Q, despite having an economy ravaged by 6.6 million coronavirus infections. The support for the Indian rupee comes from a rare current account surplus, and billions of dollars in inflows.
The Indian rupee exhibits strong seasonal patterns: the rupee typically falls in value every second-quarter (April-to-June) due to India’s heightened gold demand heading into Akshaya Tritiya – the annual spring time festival of the Hindus and Jains.
Accordingly many currency forecasts point out that rupee strength is to be expected in the second half of a typical year.
You can also read our full Foreign Exchange Guide to India.
Whether the rupee will rise or drop in the future is a difficult question and the answer really depends on many factors. The best way to consider an exchange rate’s current relative value is to look at the Indian Rupee’s history against a range of currencies and in particular against the currency you are interested in exchanging it with.
For example, the sections below look at the change in the INR exchange rate to the present day for periods back 10 years for popular INR exchange rates.
In 2021, a pipeline of IPOs attracted inflows of portfolio capital which helped buoy the Indian rupee relative to some of its other Asian peers. When most currencies in the region have weakened to some extent versus a stronger dollar.
However, the recent flop of the PayTM IPO and some others suggests that the rupee in 2022 won’t benefit so much from another inflow of funds.
The Ukrainian crisis and its risks for European energy supplies have pushed the Pound down against the Rupee.
At the end of the January the GBP/INR exchange rate was heading towards the 100 mark down from its highs around 104 in April last year.
AUD/INR has risen 3 percent back to the 55 level since late September mainly due to AUD strength as Australia profits from energy prices hikes.
In September the ‘risk off’ market mood has pushed the Australian dollar further down against the Rupee. After peaking in April near 58 the AUD/INR exchange rate changed direction and has headed down towards the 53-54 mark.
The Ukrainian crisis and the risk-off market for European energy supplies have pushed the Canadian dollar down against the Rupee.
At the end of the January the CAD/INR exchange rate was heading towards the 59 mark down from its highs around 61 in October last year.
Disclaimer: Please note any provider recommendations, currency forecasts or any opinions of our authors should not be taken as a reference to buy or sell any financial product.