Rupee on the Ropes: Analysts Predict Further Slide Against Dollar

The Rupee is bracing for a challenging year, with predictions from a Reuters survey predicting a consistent decline against the dollar. The currency is expected to fall to ₹87.18 per dollar by June 2025, again falling to ₹87.50 by September and reaching ₹87.80 by March 2026. This is a continuation of the rupee's underperformance, where it fell 3% in 2024.

 

The depreciation is attributed to several factors including fears of a U.S.-led trade war, slowing down of domestic economic growth, and foreign investor withdrawal. More than $14 billion has so far been withdrawn from Indian equities this year putting more pressure on the currency. The Reserve Bank of India (RBI) has come in to stem the rupee but is constrained by shrinking forex reserves and liquidity issues.

 

Though the RBI has held its ground at key levels over recent months, economists caution that retaliatory tariffs and global uncertainties are likely to weigh on the rupee's descent. This is a prolonged weakness that would rank as one of the longest currency depreciation spells over the past two decades.

 

With India struggling with these issues, policymakers are under increasing pressure to balance economic growth with exchange rate stability.

 

Sources: Reuters, Economic Times