The Indian rupee looks set to end its recent volatile phase as surging foreign inflows and a possible hawkish turn by the central bank curb swings, according to Credit Agricole CIB, the currency’s top forecaster. Yet, higher foreign inflows and the prospect of the Reserve Bank of India moving to control inflation may help control the rupee’s volatility. “However, by boosting inflation, they may make the RBI more hawkish, which will support the rupee. Overall, the RBI is likely to intervene to oppose the INR’s strength and smooth its volatility." The “current-account deficit has widened again, but foreign direct investments should remain solid," said Kowalczyk.

Source: Mint July 15, 2021 02:26 UTC