During the first two months of the year, the Indian rupee beat all other emerging market currencies, laying the groundwork for a successful 2024 as inflows are encouraged by the country's membership in international bond indexes.

Over the last two months, the rupee has remained relatively stable in relation to the dollar, making it the only currency of a developing country to have avoided a fall while the dollar surged higher. The progress occurred when foreign investors invested about $5 billion in Indian bonds in anticipation of the country's listing in international indexes in the upcoming months.

According to Credit Agricole SA and TD Securities, the value of the Indian rupee is expected to increase from about 82.9 on Tuesday to 81 per dollar by the end of December. The rupee has exhibited low volatility compared to other emerging-market currencies this year. Market participants have conjectured that the central bank might have utilized its $619 billion foreign exchange reserve stockpile to mitigate the fluctuations.

“Overall, we will likely see a mild appreciation of the rupee with volatility still remaining quite low,” said Prashant Singh, senior portfolio manager for emerging-markets debt at Neuberger Berman in Singapore. “Some near-term rupee outperformance might be seen on the back of index-related flows,” he adds.

Based on statistics gathered by Bloomberg, the median analyst expectation is for the rupee to strengthen to 82 per dollar by the end of the year.