Fitch Solutions revises forecast, says Indian rupee to trade weaker in 2021
Fitch Solutions has revised its forecast for the Indian rupee to average stronger at Rs 75.50 per US dollar in 2021 from Rs 77 previously, and Rs 77 in 2022 from Rs 79 previously to account for a stronger 2021 forecast.
“We expect the rupee to trade only slightly weaker over the near term from current levels,” it said.
“We see depreciatory pressure on the rupee due to worsening terms of trade from rising oil prices, further monetary easing and bouts of risk-off sentiment being partially offset by US dollar weakness and central bank foreign exchange intervention to combat imported inflation.”
Over the longer term, said Fitch, the over-valuation of the rupee in real terms and higher inflation in India vis-a-vis the dollar should exert weakening pressure for the rupee.
