RBI will be content to see a stable Rupee – Commerzbank

USD/INR remains remarkably stable. Economists at Commerzbank analyze the pair’s outlook.

RBI content with stable rates and currency

The Reserve Bank of India (RBI) left the benchmark repo rate unchanged at 6.50% as expected. RBI remains in a wait-and-see mode. There is no urgency to alter policy in any direction at this juncture. The economy is on track to expand by 7% in 2023.

RBI also upgraded the forecast for the current fiscal year 2023-2024 to 7% from 6.5% previously. At the same time, inflation is well-controlled, as there are no signs of uncontrolled demand-led or input-cost inflation. Headline inflation is expected to average around 5.7% this year and should hold around 5% in Q4 2023. This is within RBI’s 2-6% target range.

Lower oil prices should aid INR sentiment and help to contain import inflation. Overall, RBI will be content to see a stable INR.