Rupee on a Gentle Slide: Reuters Poll Predicts INR to Touch 86.13 Against Dollar by June 2026

India’s currency is projected to weaken gradually over the next year, according to a Reuters poll of foreign exchange strategists. Despite the Reserve Bank of India’s active intervention to curb volatility, the rupee is expected to breach the 85-per-dollar mark by September and continue its downward trajectory through mid-2026.

 

Here’s a detailed look at the forecast and its broader implications.

 

Key Forecasts and Timeline

 

- The Indian rupee is expected to weaken to 85.75 per US dollar by the end of September 2025  

- It may recover slightly to 85.50 by December 2025, before sliding further to 86.13 by June 2026  

- These projections reflect a modest depreciation from current levels near 83.20, suggesting a controlled decline rather than a sharp fall  

 

RBI’s Role and Market Dynamics

 

- The rupee is trading within its narrowest range in nearly three decades, thanks to RBI’s tight grip and use of its $650 billion forex reserves  

- Analysts believe the central bank will continue to intervene to limit volatility, even if it allows gradual depreciation  

- The currency’s implied volatility remains near two-decade lows, indicating limited swings in the near term  

 

Global Factors and Dollar Strength

 

- The US Federal Reserve’s delayed entry into the global rate-cut cycle is expected to keep the dollar supported, adding pressure on emerging market currencies like the rupee  

- Inflation in the US may not reach the Fed’s 2 percent target until late 2025 or 2026, further delaying monetary easing  

- This backdrop could lead to continued strength in the dollar, prompting a gentle but persistent weakening of the rupee  

 

Strategist Views and Long-Term Outlook

 

- While most analysts expect the rupee to remain rangebound in the short term, a few anticipate a lifetime low by mid-2026  

- The RBI’s strategy of curbing volatility has led to rupee behavior resembling a pegged currency, raising concerns about long-term flexibility  

- Despite the projected weakening, the magnitude is not expected to be disruptive, with the rupee still seen as relatively stable compared to other emerging market currencies  

 

As India’s economy continues to grow and global monetary dynamics evolve, the rupee’s path will be shaped by a delicate balance of domestic policy, external pressures, and strategic intervention.

 

Sources: Reuters Poll, Economic Times, July 2–3, 2025