The rupee finished at 82.1650 per dollar on Friday, 0.67% higher in the final quarter of fiscal year 2023. It moved in a 80.88-82.95 range over the last three months to March.
The dollar index was headed for a quarterly drop of 1% as the Federal Reserve's terminal rate went through multiple revisions due to persistently strong economic data and fears of a U.S. banking crisis. Oil prices fell over the period, on concerns over a slowdown in global growth, with Brent crude futures down more than 8%. Lower commodity prices have improved India's trade deficit over the past two months, helping its current account deficit outlook, which analysts at foreign banks said make the fiscal 2024 macro backdrop for the rupee supportive. The currency would gradually head towards 80 per dollar, they said. However, market participants agree that would require the Reserve Bank of India (RBI) loosening its rein on the rupee. "Now we'll move into a new financial year and the balance sheet considerations, if at all, that the RBI may have had in terms of USD/INR levels will not be as pressing," said Nitin Agarwal, India head of trading at ANZ.
The RBI allowing more flexibility in the currency will bring
a "degree of freedom" for spot traders and make some rupee
appreciation in the coming quarter maybe possible, he added.
On the monetary policy front, as traders price in a Fed
pause and subsequent rate cuts, the RBI is seen hiking rates
once more at its meeting next week, before holding them steady
for the rest of the year.
"A further rate hike in the upcoming meeting would be
supportive of the rupee", wrote Bank of America Securities
analysts in a note earlier this week.
"India may begin to get more debt inflows for carry exposure
and via corporate debt fund raising."
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INR snaps five-quarter losing streak; gains 0.67% in March-qtr
INR snaps five-quarter losing streak; gains 0.67% in March-qtr ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Anushka Trivedi; Editing by Nivedita
Bhattacharjee)
