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Wells Fargo Looks For INR Outperformance In The Medium Term

INDIA

The US bank is constructive on the Indian outlook (aided by the recent GDP beat). It expects this to aid rupee over the medium term.


Wells Fargo: "We have flagged India as having potential to outperform in 2024, both from an economic and financial markets perspective. Recent GDP data beat expectations by a wide margin, and while one-off developments may have played a role, we still expect India's economy to be among the fastest growing major economies in the world this year. Economic outperformance should lead to the Reserve Bank of India (RBI) maintaining a cautious stance on monetary policy and delaying a shift to policy rate cuts until H2-2024. In our view, delayed easing should support the rupee over time, while we believe a Prime Minister Modi re-election and policy continuity will also be a source of rupee strength. In addition, we believe India's strong growth and shift toward improving public finances can lead to capital inflows and provide rationale for credit ratings agencies to potentially deliver a sovereign credit rating upgrade in the coming quarters. Ultimately, we believe the combination of economic outperformance, a prudent central bank, easing political risk and improved sentiment should all lead to the Indian rupee also outperforming by the end of 2024 and into mid-2025."

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The US bank is constructive on the Indian outlook (aided by the recent GDP beat). It expects this to aid rupee over the medium term.


Wells Fargo: "We have flagged India as having potential to outperform in 2024, both from an economic and financial markets perspective. Recent GDP data beat expectations by a wide margin, and while one-off developments may have played a role, we still expect India's economy to be among the fastest growing major economies in the world this year. Economic outperformance should lead to the Reserve Bank of India (RBI) maintaining a cautious stance on monetary policy and delaying a shift to policy rate cuts until H2-2024. In our view, delayed easing should support the rupee over time, while we believe a Prime Minister Modi re-election and policy continuity will also be a source of rupee strength. In addition, we believe India's strong growth and shift toward improving public finances can lead to capital inflows and provide rationale for credit ratings agencies to potentially deliver a sovereign credit rating upgrade in the coming quarters. Ultimately, we believe the combination of economic outperformance, a prudent central bank, easing political risk and improved sentiment should all lead to the Indian rupee also outperforming by the end of 2024 and into mid-2025."