USD/INR seen at 81.00 by year-end – SocGen

The Indian Rupee (INR) registered modest gains vs. the US Dollar (USD) last week. Economists at Société Générale analyze USD/INR outlook.

No reason to fret over INR depreciation

There is no reason for markets to fret over INR depreciation.

Confidence that the government will lower the budget deficit target for FY25 to 5.2-5.4% of GDP in February (from the FY24 target of 5.9%) is supportive of the currency and INRGBs.

The general election in April/May naturally poses tail risk, but favourable results for the BJP in state elections mean PM Modi can steer clear of a populist election agenda.

We are forecasting a 10-year yield of 6.20% and 81.00 for USD/INR at end-2024.