<div>Domestic politics will increasingly drive the fate of the Indian rupee, much like the Japanese yen or the euro, HSBC says in a note. HSBC says its base case scenario is for the government to maintain its reform agenda, but warns the parliamentary process is "fraught with downside risks."</div><div> </div><div>"This debate will be a litmus test for the INR and the reform process," HSBC writes. "If we were to a see a reversal of some of these recent reforms, it would undoubtedly put increasing weakening pressure on the INR."</div><div> </div><div>HSBC expects "strong upward pressure" on the USD/INR should the reform process falter, but for the pair to retrace its recent gains should the government gain traction with its policies.</div><div> </div><div>(Reuters)</div>
