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Comment on Rupee 30 August 2022 By Mr. Hitesh Jain, Lead Analyst – Institutional Equities, YES SECURITIES

“Indian Rupee is flirting around 80 levels against the US dollar and is likely to scale further lower as Federal Reserve has proclaimed that the US monetary policy probably needs more tightening until inflation is under control. Although the central bank did not provide cues on the size of rate hikes in September and ensuing policy meetings, investors are paring back expectations that the Fed could tilt to a slower pace of rate hikes. For what it’s worth, the Fed funds futures market is now assigning a 70% probability to a 75-basis point rate increase in September. On the INR outlook, it seems the path of least resistance is on the downside. Having said that, USD/INR will likely inch towards the 81 mark but we do not see a major downside as RBI remains committed to preserving the INR in a confined range. Needless to mention, RBI’s war chest in terms of adequate FX reserves to counter the volatility in INR.  Also, FII flows into Equities remain positive, while markets will derive courage from an imminent possibility of the inclusion of Indian Bonds in Global Indices.”

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