Q How low can the rupee go? Your outlook on rupee and the Indian economy...

l N.R. BHANUMURTHY: In the short term, it appears that the rupee could weaken further, especially due to the expected tightening of interest rates in the US. But in the medium to long term, with strong macro fundamentals, the currency may not slip further. Mind you, during the latest crisis, unlike advanced countries and some EMEs (emerging market economies), India adopted growthoriented and mostly supply-side fiscal policies, and this should help improve productivity vis-à-vis our trading partners.

l ADITI NAYAR: With the rebound in crude oil prices and the expectation that the US dollar will remain relatively strong in the immediate term, the INR may depreciate further to 81.0/$ in Q2FY2023. With the spike in US inflation, expectations of aggressive monetary tightening by the US Fed have led to fears of a global recession, which has led to a considerable correction in commodity prices. Our sense is that while rate hikes by the Fed may be large and front-loaded, they may end sooner than expected by the markets if the recent downtrend in global commodity

prices sustains and transmits to lower inflation readings. This will pare risk aversion and help EM currencies such as the INR correct to an extent in H2FY2023. In our view, with domestic services demand appearing robust, lower global commodity prices are a positive for India’s economic outlook. The recent correction in key commodity prices, including crude oil, amid fears of a global recession, is likely to ease the pressure on input costs and hence the margins of India Inc. in the immediate term, despite the weaker INR. If this downtrend sustains, we see a tangible upside to our estimate of YoY GDP growth of 6.5-7.0 per cent for Q2FY2023.

l DHARMAKIRTI JOSHI: The rupee could continue testing 80+ levels in the near term as global risks keep piling up, the Fed remains hawkish, and India’s external vulnerability is on the rise. The global financial crisis and taper tantrum episodes tell us that, while the rupee overshot its long-term trend at the peak of the shock, it also corrected when the risks subsided. So we do expect it to appreciate to below 80 levels by the last quarter of the fiscal. We see GDP growth at 7.3 per cent for this fiscal, with risks tilted downwards, and inflation at 6.8 per cent. Most economic indicators point to a healthy economic performance in the AprilJune quarter.

l AJAY SAHAI: Global trade is entering a difficult phase. The inventories are pretty high, affecting the demand. The high inflation globally and recession in advanced economies are other challenges, contracting demand. Besides, the commodities prices are declining, affecting exports value. At the current level, we expect exports to be around $ 460-470 billion. If the geopolitical situation improves, these projections may change dramatically. ■