Veronica Dudei Maia Khongwir wrote that the Indian rupee will stay in a narrow range against the U.S. dollar in the coming year. This is because the Reserve Bank of India will continue to intervene in the market to protect the currency from sudden changes. The rupee reached a low of 83.97 against the dollar but has only decreased by about 1% this year. The Reserve Bank of India has been buying dollars to keep the rupee stable, as shown by its record high foreign exchange reserves of $681.69 billion. Analysts predict that the rupee will strengthen slightly over the next few months but remain at around 83.60 in a year.
Economist Dhiraj Nim from ANZ said that the RBI’s efforts have kept the rupee from strengthening despite a weaker dollar. The RBI’s strategy of buying and selling foreign exchange helps keep the rupee around 84 to the dollar. Experts believe that the RBI’s intervention is necessary because the rupee is currently overvalued by 7%. The RBI aims to bring the rupee back to its fair value to support exports.
Some analysts think the rupee could reach a new low based on a longer-term view.
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