The rupee is trading close to its all-time high against the US dollar at around Rs 83.30, and the Reserve Bank is actively intervening in the forex market to curtail volatilities, it added.
“…the RBI can easily spend at least $30 billion to defend the rupee, and even then, the import cover will remain around 10 months,” the brokerage said in its report.
The rupee rose by 5 paise to close at 83.06 against the dollar at the end of the day’s trade on Thursday.
The brokerage also estimated that the headline inflation will cool off sharply to 5 per cent for September, from 6.8 per cent in August, on a decline in the vegetable prices, but noted that there is an increase in global crude prices to $95 a barrel.
However, the fuel station prices are unlikely to change despite the pressure from global crude, owing to the upcoming state elections, which will be followed up with general elections, the brokerage said.
It also said that the central government recently cut prices of domestic cooking gas up to Rs 200 per cylinder, which will lead to a 0.25 per cent decline in the CPI.
Ideally, a ten per cent spike in crude prices can otherwise impact consumer price inflation by 0.30 per cent, it noted.
If domestic pump prices of petrol and diesel are not raised, then they are unlikely to have any meaningful impact on growth estimates, the brokerage said, reiterating its view of FY24 GDP growth to come at 6.2 per cent.
The brokerage said headline inflation can fall below 4 per cent in July-September 2024 due to the exceptionally favourable base effect, and the RBI may consider a rate cut from April 2024 onwards.
The note said it does not foresee any major upside risk to the balance of payments estimates at this stage, even with the current spike in oil prices, and added that India’s current account deficit will come at 1.4 per cent in FY24.