User 1

The Indian Rupee Fundamentally Weak, Shaking Off Postive FII Sentiment (SAY, WIT, INFY, GLD)

Prince,

Actually, interest rate differentials will not be very helpful, since capital controls introduce a wedge in the interest parity condition, and this wedge depends on the RBI’s reaction function. Rather (and contra to the last sentence in my earlier comment), productivity differentials between India and her prominent trading partners will be more informative about where the rupee is headed in the long run. Countries with higher productivity typically have more appreciated exchange rates.

Deep