USD/INR: Unusual Indian Rupee strength in September, a transitory blip – ING

The Research Team at ING forecast the USD/INR pair will trade at 72.50 in 1M, 73.50 in 3M and at 73.80 in 6M. 

Key Quotes: 

“After all the volatility caused by global and domestic factors, September turned out to be a better month for the INR as bigbang fiscal stimulus including $20 billion of corporate tax cuts buoyed portfolio inflows into local equities.”

“However, two single-day spikes in the USD/INR rate – first, 1.4% following the release of 2Q19 GDP report showing a six-year low 5% growth, and second, 0.9% after the attack on Saudi oil facility causing a steep surge in oil – reinforced INR’s vulnerability.”

“With the RBI on an easing binge, worries about a blow-out fiscal deficit hurting investor confidence, and the government’s plan of borrowing overseas getting shelved, sustained INR weakness ahead remains the safest bet for now.”