New Delhi: Amid relentless pressure, the Indian rupee faces a turbulent 2026, with experts forecasting a further depreciation of around 4 per cent, potentially pushing it to the 94 level against the US dollar.
Investment bank UBS’s Head of Asia FX and Rates Strategy, Rohit Arora, has issued a warning, blaming the impending decline on delays in India-US trade agreements, sluggish GDP growth, and potential capital outflows. “In 2026, the Indian rupee could witness about 4 per cent depreciation,” Arora stated, highlighting how investor caution over bilateral trade pacts and global tariff disputes has exacerbated the currency’s woes.
The rupee has already endured a sharp fall, breaching the 90 mark in recent months after tumbling from 85 in just 231 days. Increased dollar demand from importers, coupled with the Reserve Bank of India’s limited interventions, has amplified the downturn. Although a brief respite came on Wednesday, when the currency closed stronger at 89.87 following RBI support and softer crude oil prices, long-term headwinds persist.
Market watchers point to broader factors: heightened US dollar demand, the impact on Indian exporters from trade frictions, and domestic economic slowdown. This trajectory could inflate import costs, fuel inflation, and strain India’s external balances, even as the central bank guards its forex reserves judiciously.
As geopolitical and economic uncertainties linger, the rupee’s fate remains a key concern for policymakers, businesses, and households alike, underscoring the challenges in navigating global currency volatility.
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