According to Reuters article published on February 2, 2023, the Indian rupee is expected to be under far less pressure than it was in 2022, as a global economic slowdown will mean a potentially weaker dollar and lower commodity prices which would lead to lower imports, the country's chief economic adviser said on Thursday.
"Given the scenarios and given our relatively better GDP growth, we expect rupee to be far less under pressure than it was in 2022,” V Anantha Nageswaran told Reuters in an interview, adding 2023/24 should be a “less eventful” year for the local currency.
In 2022, the rupee declined 10.14% on the year, its biggest loss since 2013, making it the second worst-performing Asian currency as the U.S. Federal Reserve's aggressive rate hikes battered emerging market currencies and boosted the dollar.
But recessionary fears in western economies are expected to lead to a dovish stance from the Fed in 2023, helping other currencies to stabilise against the dollar.
Last month, the International Monetary Fund said global growth in 2024 would accelerate slightly to 3.1%, a tenth of a percentage point below the agency’s October forecast, as the full impact of steeper central bank interest rate hikes slows demand globally.
Meanwhile, India in its annual Economic Survey forecast economic growth of 6% to 6.8% in the 2023/24 fiscal year, slowing from the 7% growth projected for the current year ending March 31, as a global slowdown might hurt exports.
The report, prepared by Nageswaran, said its baseline scenario was for 6.5% growth in 2023/24, which would make India one of the fastest growing economies.
Nageswaran said India’s scheme to offer production-linked incentives to local manufacturers will boost export capacities.
