Rupee forecast: Analysts predict steady decline amid tariff pressures
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The Indian rupee, after dipping below 88 against the U.S. dollar this week, is unlikely to experience rapid depreciation according to a Reuters poll. However, over a third of surveyed analysts warn the currency could edge toward 90 if substantial U.S. tariffs on Indian exports remain in place.
Earlier this week, the rupee touched an all-time low of 88.33 per dollar before stabilizing slightly following Reserve Bank of India (RBI) measures. The central bank leveraged portions of its $690 billion foreign exchange reserves to sell dollars and temper market volatility.
Despite India’s strong 7.8% quarterly economic growth, currency analysts project the rupee’s weakening trajectory will continue. Persistent trade pressures from proposed U.S. tariffs—potentially reaching 50%—are viewed as a major constraint on India’s trade balance and foreign investment flows.
Market projections suggest the rupee may hover near 88.04 by September’s end, easing to 87.75 by November and recovering modestly to 87.51 by February. Nonetheless, over half of forecasters anticipate fresh record lows within the coming year.
STCI Chief Economist Aditya Vyas highlighted the rupee’s historical overvaluation as a structural factor driving gradual depreciation. He emphasized that even robust growth metrics may struggle to counteract ongoing external trade uncertainties.
Teresa John, Deputy Head of Research at Nirmal Bang, foresees sustained pressure on the currency due to trade disputes, projecting potential weakening to 89.5 against the dollar within twelve months. She noted a low probability of breaching the 90 threshold unless tariff conditions intensify.
Market observers indicate the RBI’s priority remains stabilizing sentiment to prevent abrupt capital flight, rather than defending rigid exchange rate targets. With currency movements largely contingent on global trade policies and economic shifts, analysts advise vigilance amid possible volatility.
The rupee’s outlook remains fraught with challenges, reflecting persistent headwinds for India’s currency markets.
