Goldman Sachs projects limited downside for the Indian rupee as new policy measures to boost foreign inflows cap depreciation and support the currency, offering a potential trading opportunity in USD/INR.
Goldman Sachs sees the rupee's weakness as limited after India's moves to boost foreign inflows. The steps, likely including easing investment rules or increasing limits, are expected to attract capital, capping any further depreciation. This suggests USD/INR may face resistance, with the pair unlikely to rally significantly from current levels.
It suggests selling rallies in USD/INR, as the pair is unlikely to break higher due to the inflow-supportive measures. Near-term resistance may hold.
If global risk aversion spikes or the Fed signals more aggressive tightening, the dollar could strengthen across the board, overwhelming the local measures.
Goldman Sachs expects the Indian rupee to resist further depreciation after the government enacted measures to increase foreign capital inflows. The steps, aimed at attracting overseas investment, provide a cushion against dollar strength and global risk-off moves. The call suggests USD/INR upside is limited, with a near-term ceiling likely forming.
Due to recent steps by India to boost foreign capital inflows, which should provide support to the currency and prevent further depreciation.
It highlights that proactive policy measures can differentiate performance among EM currencies, with the rupee potentially outperforming peers if inflows materialize.