General elections, inflation and growth slowdown as well as emerging market economies vulnerability remain the major factors for the second consecutive drop in the Reserve Bank of India (RBI) Current Rate. Yet INR should continue to face further pressure as a third Rate Cut appears practicable in June.

Indeed, although India’s budget deficit for fiscal year 2018/2019 ended 31 March 2019 meets fiscal deficit target of 3.4% amid spending cuts and a tax collection deficit of 1 trillion rupees ($14.44 billion) compared to target, the Indian economy is facing additional headwinds. Headline inflation has been ticking higher (2.86%) in February but still remains below its long-term target of 4% while the real gauge eased at 5.02% (prior: 5.29%). Furthermore, India’s GDP growth closed the last quarter of 2018 in its slowest pace in five quarters (GDP y/y 2018: 7.20%). It is therefore to observe whether PM Narendra Modi party Bharatiya Janata will be winning actual general elections closing in