The report noted that major pressures include slowing foreign direct investment (FDI) flows, weak manufacturing exports, and a narrowing policy rate differential with the United States.
According to a report by Standard Chartered Bank, the Indian Rupee (INR) is expected to face challenges in 2025 due to several global and domestic factors. The report noted that major pressures include slowing foreign direct investment (FDI) flows, weak manufacturing exports, and a narrowing policy rate differential with the United States.
It said “slowing FDI inflows, weak manufacturing export growth amid weak global demand and policy rate differential with the US are likely to pressure the INR”. The report projects the rupee to trade at 85.5 per US dollar over the next 12 months, with a slight depreciating trend.
While India’s improved economic growth, attractive real yields, stable balance of payments due to inclusion in global bond indices, softer commodity prices and strong foreign exchange reserves held by the Reserve Bank of India (RBI) are helping some factors. Currency, they may not be enough to offset other pressures.
It said “We expect the INR to trade at 85.5/USD over a 12-month time horizon with a modest bearish bias”. On the bright side, the report highlighted several positive drivers for Indian equities. It noted that India’s GDP growth and corporate earnings are likely to outpace those of major global peers.
Additionally, steady inward inflows through systematic investment schemes (SIPs) and resumption of foreign investment – sound macroeconomic fundamentals, expected US Federal Reserve rate cuts, and relatively low foreign investor positions – are expected to provide strong support to Indians. stock.
The report also predicts a recovery in India’s economic growth from the current cyclical slowdown, driven by factors such as higher government capital spending, improved rural demand, improved urban consumption, and broad policy support. It said “We expect India’s economic growth to recover from the cyclical slowdown and remain ahead of its major peers in 2025.”
According to the report, lower food prices are expected to moderate inflation due to better sowing of summer and winter crops and possible government measures to manage supply concerns. In addition, inflationary effects due to past policy tightening are expected to play a role in reducing inflationary pressures.
Despite the challenges for the rupee, the report emphasizes India’s resilience, pointing to its strong macroeconomic fundamentals and growth potential as key factors shaping its economic outlook for 2025.
(This story was not edited by DNA staff and was published by ANI)