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Rupee to depreciate amid low volatility – Dun & Bradstreet

Mumbai, September 30, 2023

Key economic forecast:

Real Economy: Dun & Bradstreet expects the Index of Industrial Production (IIP) to register a healthy growth, partly due to the low base of last year. Consumption and investment support Industrial activity. Investment growth remains robust, supported by strong bank credit growth. Indian festive season demand will further stimulate consumption. Dun & Bradstreet expects the IIP to have grown by 6.5% during August 2023.

Price Scenario: Dun & Bradstreet expects retail inflation to remain elevated and stay above the RBI’s upper target range in the month of September 2023. Although high inflation in vegetables is seasonal, items such as cereals, pulses, and spices are showing persistent upward pressure. Meanwhile, global crude oil prices continue to rise, amid persistent supply worries. Wholesale Price Index (WPI) will remain in the positive zone after recording negative growth for five straight months. Dun & Bradstreet expects the Consumer Price Inflation (CPI) to be 6.9% and WPI to be around 0.7% in September 2023.

Money & Finance: The 10-year bond yield will inch higher as US Treasury yields remain elevated and retail inflation remains high, which has pushed the rate cut possibility by the Reserve Bank of India (RBI) to next year. Even though the RBI announced a phased withdrawal of incremental cash reserve ratio (I-CRR), liquidity is expected to remain in deficit amid advance tax outflows. Tight liquidity conditions will keep the short end of the yield curve elevated. Dun & Bradstreet expects the 15-91-day Treasury Bills yield at 5.9% and 10-year G-Sec yield to be 7.3% for September 2023.

External Sector: Elevated US Treasury yields, higher crude prices and strength in the US dollar is likely to exert further downward pressure on the Indian rupee. Headline inflation will remain elevated adding downward pressure on the rupee. The RBI to intervene to reduce volatility and prevent sharp depreciation. Dun & Bradstreet expects the rupee to remain at 83.1 per US$ in September 2023 and 83.4 per US$ in October 2023.

Dr Arun Singh, Global Chief Economist, Dun & Bradstreet said “The Indian festive season will boost short-term consumption. Elevated retail inflation amid monsoon season uncertainty poses risk to the consumption boost. On a positive note, the multiple strategic partnerships forged during India’s G20 presidency will enhance its market potential and open opportunities for greater integration with global economies. India’s addition in J.P. Morgan Emerging Markets bond indices is further set to boost foreign portfolio investments.”

Dun & Bradstreet’s Economy Observer Forecast



Latest Period

Previous period

IIP Growth

6.5% August-23

5.7% July-23

3.8% June-23

WPI Inflation

0.7% September-23

 - 0.52% August-23

-1.36% July-23

CPI (Combined) Inflation

6.9% September-23

6.83% August-23

7.44 % July-23

Exchange Rate (INR/US$)

 83.4 October-23

83.1 September-23 (est.)

82.79 August-23

15-91 day's T-Bills

5.9% September-23

6.49% August-23

 6.35% July-23

10-year G-Sec yield

7.3% % September-23

7.2% August-23

7.11% July-23

Bank Credit

18.2% September-23

19.8% August-23

14.7% July-23




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