The Indian rupee is expected to strengthen towards 79 by the end of the current fiscal year (FY24), as per a report by UBS Securities. Tanvee Gupta Jain, the Chief India Economist at UBS Securities, believes that a narrowing current account deficit (CAD) and a weakening dollar volatility index are likely to help the rupee gain value against the greenback by FY24. Additionally, UBS estimates that crude prices will average $80/barrel in FY24, compared to $95 a barrel in FY23.
RBI is likely to cap any significant gains in the near-term, in order to rebuild its forex reserves as a precautionary measure against any global spillovers. The risk of global financial instability has impacted the overall growth outlook of many, but the Indian economy is expected to suffer only limited spillovers from the current US/European banking market strains.
The third-quarter’s CAD narrowed to 2.2 per cent of GDP or $18.2 billion, and UBS believes it may further improve to 1.2 per cent of GDP in FY24 from 2% in the just concluded fiscal. Moreover, services exports have been projected to be resilient during FY23, accounting for $326 billion up 1.7x compared to FY20. This has resulted in an increase of India’s share in the global services trade share to 4 per cent in 2021 from 3.4 per cent in 2019, majorly driven by software and business consulting services.
UBS Securities is a global investment bank and financial services provider, headquartered in Zurich, Switzerland. The company has a strong presence in Europe, the United States, Asia Pacific, the Middle East, and Japan. It provides wealth management, asset management, and investment banking services to corporate, institutional, and individual clients around the world.
Tanvee Gupta Jain is the Chief India Economist at UBS Securities. Before joining UBS, Jain worked at DBS Bank and Ambit. At DBS, she was responsible for conducting sectoral analysis, building Indian Economic models, developing strategy notes and assisting multiple research teams. Her academic background includes a specialization in economics from St. Xavier’s College, Mumbai and an MBA from the Indian School of Business (ISB) in Hyderabad.