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Below The Views on Indian Rupee by Rajani Sinha, Chief Economist, CareEdge Ratings.

“With inflation in the US, surpassing market expectations for four consecutive months, inflationary concerns have aggravated. In its May policy, the Fed acknowledged limited further progress towards its inflation goal and highlighted that the inflation path remains uncertain. Markets expect US interest rates to stay higher-for-longer and are pricing in just one rate cut in 2024. Meanwhile, oil prices have eased due to reduced Middle East tensions and a rise in US crude oil inventories. Further, higher-for-longer interest rates are expected to weigh on crude oil demand. While FPIs have pulled out of Indian markets in April, FPI inflows are expected to rebound following India’s inclusion in the JP Morgan bond index in June. We expect the USD/INR to trade in the narrow band of 83.25 – 83.75  in the remainder of Q1FY25. RBI interventions are expected to limit any volatility.

Market attention is now focused on the US job market report due on Friday. The data is likely to show that the US labour market remains strong. While US non-farm pay-roll additions are expected to slow in April, they are expected to remain well above pre-Covid levels. The US unemployment rate is expected to remain unchanged.”

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