USD/INR continues to hold within the 82.50-83.50 range of the six months. Economists at Commerzbank analyze Rupee’s outlook after extraordinary GDP surprise in India.

Strong Q4 GDP growth

Q4 GDP grew by a stronger-than-expanded 8.4% YoY and Q3 was revised up to 8.1% from 7.6% initially. 

The government revised up the growth forecast for the current fiscal year 2023-2024 to 7.6% from 7.3% previously. For the next fiscal year 2024-2025, the outlook remains positive and we could see above 7% growth.

For PM Modi, it will provide yet another boost to his popularity ahead of the federal elections to be held in April and May. For RBI, the strong growth momentum will only reinforce their bias to stay on hold at 6.5% for the foreseeable future. 

The stable inflation picture and the strong economic outlook should continue to support INR.