Rupee hits an all-time low, new inflation forecasts

The rupee dropped to an all-time low of 83.1/$ on Thursday and the depreciation this week may have been larger had the RBI not stepped up its FX intervention. The good news is that the central bank is well-placed to ramp up its intervention given that it spent the first half of this year accumulating FX reserves. Meanwhile, we have revised up our headline CPI inflation forecast for 2023 from 5.3% to 6.0% in light of the recent surge in food prices.