USD/INR: RBI to defend the 78.00 level in the short-term – Credit Suisse

Economists at Credit Suisse think the Reserve Bank of India (RBI) will defend the 78.00 level in USD/INR in the short-term. Nevertheless, once the 78 level breaks, a new USD/INR trading range of 77-80 is expected.

Strong Indian consumption and imports to put weakening pressure on the rupee

“In the short term, we think the RBI will defend the 78.00 level in USD/INR, but once that breaks (likely in the next four weeks) we expect a new USD/INR trading range of 77-80.”

“Over time we think strong Indian consumption and imports will continue to put weakening pressure on the rupee, while the RBI’s ‘permitted’ USD/INR trading range (currently 76-78) will shift higher.”

“We think the RBI will continue accumulating reserves, and will limit INR strength to 76.00.”