Nomura is betting that the Indian rupee will rally by 2% through August-end on the back of portfolio inflows, a relatively less aggressive central bank and potential U.S. rate cuts.

The rupee rallying to 82 in a span of two months would be a surprise for local currency traders, a majority of who hold the view the central bank will not allow the currency to appreciate much.

The investment bank is incrementally more positive on possible rupee outperformance in the coming months, expecting it to rise to 82 to the dollar by end of next month from 83.52 at 12:08 p.m. IST on Tuesday.

“India’s post-election calm, portfolio inflows, economic sweet spot and the RBI (Reserve Bank of India) containing FX volatility are supportive factors,” analysts at Nomura said in a note released late on Monday.

Foreign portfolio inflows into the equity markets have returned following post-election outflows, while debt inflows should be stable due to the inclusion of bonds into the JPMorgan emerging market debt index, the analysts said.

Indian Prime Minister Narendra Modi-led alliance winning the national elections by a slimmer margin was unlikely to result in much of a negative impact on the macro outlook and policy, they said.

The rupee rallying to 82 in a span of two months would be a surprise for local currency traders, a majority of who hold the view the central bank will not allow the currency to appreciate much.

The RBI has regularly intervened to mop up inflows and prevent rupee appreciation, in the process pushing India’s forex reserve at near all-time highs.

These hefty reserves are what Nomura is banking on.

Record high FX reserves are “encouraging for our view” as the RBI may not need to aggressively to accumulate more, Nomura said.

Meanwhile, softer than expected U.S. inflation alongside the softening of the labour market will be potential triggers for Federal Reserve rate cuts, boosting the rupee, it said.