The USD/INR is preparing to close the week slightly lower, retracing from the record highs. The chart shows that the principal trend is positive and strong. According to analysts from Wells Fargo, the rupee will continue to fall against the US dollar, but at an ebb and flow.
"The Indian rupee recently hit an all-time low against the dollar and we expect that the currency will keep making records against greenbacks. We expect the rupee to be able to continue to fall because it becomes clear that the Reserve Bank of India (RBI) is likely to be behind the curve in tightening their monetary policy."
"While we forecast the RBI to lift interest rates again in June, we doubt RBI policymakers will be able to keep pace with the Federal Reserve."
"As the Fed raises interest rates and shrinks its balance sheet, the U.S. dollar should rally against most emerging market currencies, including the rupee."
"While we anticipate the rupee to keep hitting new levels, we believe the rate of appreciation is likely to be gradual.The RBI has a substantial reserve of reserves for foreign exchange and utilizes these buffers to reduce the volatility of the rupee.Recently, RBI FX intervention contained volatility in the currency market. Going forward, we anticipate interventions to ensure that rupee appreciation remains in a controlled manner."