NewDelhi: Fitch Solutions on Monday said it has revised its forecast for the Indian rupee to average stronger at Rs 75.50 to a US dollar in 2021, from Rs 77/USD.
For 2022, it revised the forecast to Rs 77 to a US dollar, from Rs 79 previously, to account for a stronger 2021 forecast.
“We expect the rupee to trade only slightly weaker over the near term from current levels,” it said in a note.
It saw depreciatory pressure on the rupee due to worsening terms of trade from rising oil prices, further monetary easing, and bouts of risk-off sentiment being partially offset by the US dollar weakness and central bank foreign exchange intervention to combat imported inflation.
“Over the longer term, the overvaluation of the rupee in real terms and higher inflation in India vis- -vis the US should exert weakening pressure for the rupee,” it said.
The Indian rupee averaged Rs 74.10 to a US dollar in 2020.
