Indian Rupee Under Pressure Forecast

Devendra Pincha, Chief Economist at Fitch Ratings — India Ratings and Research, has forecasted that the India — Indian rupee will remain under pressure due to several economic factors. These include weakening capital inflows, significant import dependence on commodities like Petroleum, edible oil, pulses, and electronic goods, and a widening current account deficit. Foreign portfolio investors are also shifting funds to markets with better returns, contributing to outflows from India. Rising Petroleum prices are a major concern, as every USD 10 per barrel increase is estimated to widen India's current account deficit by nearly USD 16.7 billion. This has already led to increases in petrol, diesel, and CNG prices, with further rises possible if Petroleum prices remain elevated. These pressures are also expected to contribute to rising inflationary pressures and could affect India's economic growth prospects.