Rupee's Sharp Fall: Domestic Pressures, Key Levels to Watch, Says Barclays' Kotecha

• The Indian rupee's fall to 91.7 against the US dollar is due to domestic pressures, not broader emerging market trends, according to Barclays' Mitul Kotecha.
• A surge in pent-up dollar demand and over $3.4 billion in FPI equity outflows in January intensified the rupee's weakening.
• Additional pressure comes from importer dollar demand and maturity of non-deliverable forwards (NDFs), with momentum investors like CTAs amplifying the move.
• Psychologically, 92 against the dollar is a critical level; breaching it could trigger sharper movements.
• Despite pressures, Kotecha asserts the situation is not a crisis, citing India's reasonable balance of payments and RBI's robust tools for volatility management.

Why It Matters: Rupee's fall is driven by domestic dollar demand and FPI outflows, with 92 as a key level, but RBI has tools to manage.