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According to analysts at ANZ, the Indian rupee has retraced some of the strong gains made during March this year, partly on the back of higher global oil prices.

Key Quotes

“The fact that the rupee has a strong historical tendency to depreciate during the month of May means there is potential for further near-term downside.”

“An added risk is the general election results which will be announced on 23 May. Should the outcome run counter to market expectations, this could result in foreign portfolio outflows, which will weigh on the rupee.”

“However, we see scope for the rupee to recover in the second half of the year. This is based on our view that inflation will remain stable, the monetary policy stance will stay dovish, growth will start to recover and fiscal policy will show restraint.”