The rupee appears to be in for a period of severe volatility, falling to a low of 85 to the dollar by the middle of next year and reaching a high of 78 by the end of 2024 as the dollar struggles to emerge from a correction and the Indian economy picks up speed.
The US’s financial crisis and the turbulence in the financial markets, which has hurt most currencies in developed and emerging markets, have hammered the rupee.
The central bank has been selling dollars in the market to control volatility so far this year. In addition, the government and the Reserve Bank of India have also implemented several measures to strengthen the rupee, such as easing rupee trading with specific nations.
“The story of the Indian rupee is one of resilience and stability, and we will continue to act with excessive volatility of exchange rate and orderly evolution of exchange rate,” Excluding Russia’s major banks from the international interbank payment networks was one of the sanctions imposed on the country earlier this year. As prices rose, Indian imports of Russian crude oil increased.
India’s currency is performing significantly better than it did in 2013, when the economy was regarded as one of the fragile five in the wake of the Federal Reserve’s taper tantrum despite a growing trade deficit and the likelihood that it will exceed the current account deficit threshold of three per cent of GDP this fiscal year.
RBI Governor Shaktikanta Das said earlier in December.