USD/INR likely to trade around 68 by end-2016

The value of Indian rupee is expected to be continued to be impacted by changes in global investor risk appetite given quite a large foreign holdings of Indian equities, noted Scotiabank in a research note. The Indian rupee is definitely under weakening pressure against the US dollar due to the deep capital flows out of emerging markets aftermath the U.S. presidential election. According to Scotiabank, the USD/INR currency pair is expected to end this year at 68.00.

Meanwhile, the Indian sovereign credit rating profile indicates towards a possible upgrade. Moody’s has affirmed the “positive” outlook on India’s “Baa3” rating in November. Fitch and Standard & Poor’s have rated the country in equivalent “BBB-” category, with a “stable” outlook.

Standard & Poor’s said that improvements in policymaking are underpinning the India’s fiscal and economic outlook, whereas soft public finances and low per capita income are the country’s main credit weakness. The International Monetary Fund noted that the country’s gross public debt is expected to average 67 percent of the GDP in 2016-2018.