The Indian Rupee’s future trajectory will be heavily influenced by the government’s decision on the fiscal front, analysts at Goldman Sachs said, according to Bloomberg.
“The key factor driving the rupee going forward will be the government’s fiscal stance and any aggressive fiscal easing could affect ratings, increase borrowing costs, lead to greater capital outflows, and be associated with a weaker INR,” noted Goldman Sachs’ analysts led by Danny Suwanapruti.
Citigroup Inc. expects India’s budget deficit to widen to 8% of the gross domestic product (GDP) this year, compared with a budgeted 3.5%.
The situation would have been worse had it not been for the recent oil price crash.
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