MUFG's analysis indicates that the Indian Rupee (INR) is likely to face challenges due to rising money market rates and a scarcity of capital inflows. Despite the Reserve Bank of India's efforts to inject liquidity, the report suggests that these measures may not be sufficient to support the INR in the current market conditions. The outlook remains cautious for the INR as it navigates these headwinds.

Outlook for Indian Rupee

"Meanwhile, INR money market rates have if anything risen despite RBI’s announcement to inject liquidity worth more than US$23bn on Friday, and more than US$40bn since December last year."

"The key constraint for INR FX and rates markets is that capital inflows remain scarce."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)