Rupee to trade in 79-82 range against US dollar in 2023, say experts

The Indian rupee is expected to trade in a range of 79-82 against US dollar in 2023 as the unit may continue to face pressure from external factors, experts said on November 24.

"Maybe 80-82 in first quarter of next year, 79 to 81 Q1 of next fiscal, not much difference in the second half," said Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI, speaking at the 9th SBI Banking and Economics Conclave - 2022.

"(The rupee) will depreciate a bit to 83 per dollar or so in the first half of 2023, but should strengthen after that," noted Ashima Goyal, External member RBI MPC.

"…some research we have done suggests that if we look at structural factors, India's real exchange rate is appreciating. So those should take the market back after all this volatility," she added.

On Reserve Bank of India (RBI)'s move, Rajeswari Sengupta, Associate Professor, IGIDR said, "If RBI does not intervene in the foreign exchange market then it could go 84-85 levels and that's where it will stop. It's impossible to forecast the price of certain thing."

Menawhile, on 24 November, the rupee ended at 81.63 against the US dollar. Rupee has appreciated due to falling dollar index and easing crude oil prices.

The rupee has gained a bit in last last two weeks after easing US and India inflation print. But, geopolitical tensions will continue to hurt rupee in near term as recessionary risk is still there which could fuel a safe haven bid for the dollar.

Since the start of this year, the RBI has been using its foreign exchange reserves to rescue rupee from falling sharply, which led to sharp depreciation in the reserves.

On a year-on-year basis, India's forex kitty declined nearly $110 billion from October's $642 billion, and now it stood at $544.72 billion, per the latest RBI weekly statistics.

Foreign exchange reserves showed a stellar $14.7 billion surge in the week ended November 11, according to data released by the RBI.  This was after consistent fall in the past five months.