India’s currency has been under persistent pressure from a combination of fund outflows and a rising energy bill, even as the Reserve Bank of India (RBI) rolled out a set of measures intended to slow its depreciation. After briefly climbing from a low of 96.79 rupees per U.S. dollar to the 95‑rupee level, the rupee is projected by several market strategists to weaken again, potentially reaching the psychologically significant 100‑per‑dollar mark toward the end of 2026 and into mid‑2027.
RBI’s latest market interventions
On Saturday, the RBI announced a package of actions designed to make speculative trading on the rupee more costly and to limit the re‑booking of cancelled foreign‑exchange derivative contracts. In addition, the central bank opened a special window to satisfy the full daily dollar requirements of three public‑sector oil marketing companies, effectively ring‑fencing that demand from the spot market. RBI Governor Sanjay Malhotra told the Indian media outlet Moneycontrol that the bank is “determined to do whatever is necessary to ensure orderly movement in the foreign exchange market.”
According to Devarsh Vakil, head of research at HDFC Securities, the new steps are expected to provide “short‑term to medium‑term stability, not long‑term structural support.” The measures, therefore, are seen as a tactical response to immediate market stress rather than a solution to deeper imbalances.
Forecasts from market analysts
Strategists at S&P Global Market Intelligence, led by Hanna Luchnikava‑Schorsch, expect the rupee to trade around 97 per dollar by the end of 2026 and to reach 98 rupees by mid‑2027. A similar outlook was voiced by Vishnu Varathan, head of macro strategy for APAC at Singapore‑based Mizuho Securities, who also projected a slide to 98 rupees against the greenback by late 2026 and early 2027. Both sets of forecasts acknowledge that while RBI actions may temper the pace of depreciation, they cannot fully offset fundamental pressures stemming from elevated oil prices, a widening current‑account deficit and a challenging global capital‑flow environment.
Luchnikava‑Schorsch warned that a move toward the 100‑rupee level cannot be ruled out, especially if oil prices rise further, portfolio outflows resume, or the current‑account deficit expands beyond current expectations.
Underlying structural pressures
India’s external vulnerabilities have been accentuated by several factors. The country imports roughly 85 % of its fuel, with the Strait of Hormuz serving as a key supply route that has become riskier since the outbreak of the Iran‑related conflict. Elevated energy costs have therefore added to the rupee’s downward pressure.
Foreign portfolio investors have withdrawn a substantial amount of capital this year, selling direct Indian equities worth $32.5 billion through October 13, according to data from the Indian depository NSDL. The outflow reflects heightened risk aversion and a perceived lack of artificial‑intelligence‑related investment opportunities.
In June, the RBI launched a special scheme known as the Foreign Currency Non‑Resident (Bank) deposits (FCNR‑B), offering incentives to non‑resident Indians for placing foreign‑currency deposits in Indian banks. The program boosted the central bank’s foreign‑exchange reserves by $105 billion, but the subsequent closure of the scheme on August 30 was followed by a 1.9 % decline in the rupee against the dollar.
Nomura, a global brokerage, noted that the RBI had to intervene aggressively in the spot market to counter the rupee’s decline, while Ambit Capital reported that the central bank’s dollar‑sales interventions have reduced foreign‑exchange reserves by $51 billion as of October 2. The FCNR‑B scheme and related currency‑swap measures have also generated forward dollar commitments of $200 billion, which effectively lower the RBI’s reserve cover and leave the rupee more exposed to further depreciation.
India’s import‑cover ratio – the number of months of import needs that can be met with existing reserves – has slipped to around 6.2 months, the lowest level since the U.S. taper tantrum of 2013. This weakening buffer adds to concerns about the rupee’s resilience in the face of sustained external shocks.
Policy responses and corporate advice
Prime Minister Narendra Modi has appealed to citizens to curb foreign travel and gold purchases, first in May and again last month, in an effort to ease pressure on the rupee. The calls reflect the government’s recognition that consumer‑driven demand for foreign currency can exacerbate the currency’s weakness.
Harsimran Sahni, associate director and head of treasury at Anand Rathi Global Finance, cautioned that the rupee is likely to stay under pressure throughout the financial year ending in March 2027. Sahni advised businesses to strengthen hedging strategies and to stress‑test foreign‑currency exposures, noting that while RBI interventions can moderate volatility, they cannot offset external imbalances indefinitely.
If sustained capital outflows coincide with high crude prices and a widening current‑account deficit, the rupee could move toward the 100‑per‑dollar threshold, Sahni said.
Overall, analysts agree that the RBI’s recent measures provide a temporary cushion but do not resolve the structural challenges posed by high oil import dependence, a fragile current‑account position and a global environment that is less conducive to capital inflows. The currency’s trajectory will therefore depend on how these fundamental forces evolve in the months and years ahead.
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