>USD/INR (BARCLAYS CAPITAL)

INDIA: USD/INR 56 AND DEEP RATE CUTS COMING

# We have revised our FY 09-10 GDP growth forecast to 4% from 5.2%. We see the risks as tilted to the downside.

# We expect the economy to witness deflation from April to October 2009 at least.

# In our view, further loosening of monetary policy is likely to come from significant real effective exchange rate depreciation and policy rate cuts.

# For Q3 09, our repo rate forecast is revised to 3% from 4%, and our reverse repo rate forecast is revised to 1.5-2.0% from 2.0-2.5%.

# We expect further rate cuts in the next few weeks as January IP remains weak, global macro data weaken further and financial markets remain soft.

# Our three-month USD/INR forecast is 56.

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