Indian rupee under pressure

India's next significant release will be Q2 GDP the following Monday on 31 August. Given continued weak export growth and modest production,a growth ease back from Q1's 7.5% y/y is expected, says Commerzbank. 

Finance Minister Arun Jaitley reiterated that India can still achieve 8% economic growth barring any adverse global trends, notes Commerzbank. He noted that inflation is under control and the current account deficit is the lowest in recent times.

The India Meteorological Department (IMD) said over the weekend that more than half the country has received normal rainfall so far. Overall, a deficit of 9% in rainfall was still recorded vs the long term average. If the short-fall is within reasonable limits, this should not disrupt the favourable inflation picture which saw CPI inflation eased to 3.8% y/y in July. For USD-INR, it remains in an uptrend, dragged up by the sell-off in regional currencies. INR remains under pressure and the pair is expected at the 66.50-67.00 area and slowly approach the high in August-2013 of 68.85, foresees Commerzbank.