Mumbai: Economists at Standard Chartered and Deutsche among others are forecasting the Indian rupee to depreciate to 87 against the US dollar by March 2025.
If the tariff war escalates and the Reserve Bank of India relaxes its intervention strategy in the foreign exchange market, the rupee could hit the 87 mark even before the end of this fiscal year, they cautioned.
According to economists, consistent weakness in Asian forex markets and the pressure on the rupee have been due to the broad dollar strength amid US exceptionalism, tariff threats and falling emerging market rate differential with the US.
Despite pressure on the rupee from both current and capital accounts, it has performed relatively better than other currencies in Asia's emerging markets, majorly on account of the RB''s forex management. This has been a major drain on liquidity. As per estimates by brokerage house Nomura, total liquidity dropped from ₹4.6 lakh crore on September 27 to ₹40,000 crore on December 27. According to Emkay Global, there has been $120 billion worth of interventions by the regulator in the December quar ..
"We anticipate the rupee to reflect more two-way movements in 2025 compared to the last few years," said Kaushik Das, chief economist, India & South Asia at Deutsche Bank. "While the current account deficit of below 1.5% of GDP is not difficult to finance, the inter-temporal volatility of capital flows is likely to exert pressure on the rupee, as long as the broad dollar index continues to strengthen. The RBI not cutting rates will not prevent the rupee depreciation, but it will hurt the gro ..
As per estimates compiled by ET, economists are forecasting the rupee to be between 86.25 and 88.00 against the dollar by the end of March. Meanwhile, some forecasters are suggesting that the local currency could range 87.00-87.75 at the end of December 2025.
The rupee hit a record low Monday, breaching the 86.50/$ mark, making it the worst-performing major currency globally.
"The policy intent is clear - not to make the INR an outlier in EMs, especially when it is seeing dispropor ..
Source Name : Economic Times