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The Indian rupee strengthened on Wednesday on selling by foreign banks and a weaker dollar. India’s economy is expected to grow by more than 6% this year, with gross domestic product approaching $4 trillion. In addition, according to the International Monetary Fund’s forecast, the Indian economy will become the fastest growing economy in the world in the next few years.
The Indian rupee is likely to benefit from equity inflows as Morgan Stanley Capital International (MSCI) decides to increase India’s weighting in its emerging markets index from November 30, with analysts expecting it to trade worth $15 this week. billion in stock inflows. However, a rebound in crude oil prices may limit the upside for the Indian rupee. Notably, India is the world’s third-largest oil consumer, making it particularly vulnerable to rising crude oil prices.
Market participants will focus on Wednesday’s annualized U.S. third-quarter gross domestic product (GDP) data, which is expected to rise 5.0%. Later this week, focus will shift to India’s second-quarter gross domestic product (GDP) quarterly rate due out on Thursday. Additionally, the final stages of state elections scheduled for Thursday remain in focus as a change in government could lead to revisions of existing policies, affecting the market.
