Recent months have witnessed the Indian Rupee’s favorable performance against major currencies, largely attributed to its inclusion in the Global Bond Index. However, the sustained impact is restrained by limited dollar inflows, with the Reserve Bank of India (RBI) prioritizing bolstering dollar reserves.
Impact of Global Bond Index Inclusion
The Rupee’s trajectory remains contingent on crude prices and dollar sentiment, with expectations of increased dollar inflows once Indian bonds join the index next year. The Rupee is likely to experience stability due to a robust current account and lesser fluctuations.
Dollar-Rupee Exchange Rate Projections
However, escalating tensions in the Middle East, a key crude oil supplier, could drive oil prices upward, influencing the Rupee’s value. The ongoing conflict between Israel and Hamas plays a crucial role, and its resolution can impact global crude prices, thereby affecting the Rupee’s stability.
The Dollar-Rupee exchange rate is expected to hover between 83.00 and 83.50 this quarter, subject to developments in the Middle East and RBI’s actions, particularly in dollar/rupee swap transactions. The range may extend up to 83.75 if oil prices surge due to heightened geopolitical tensions.
