The Indian rupee is projected to give up nearly all of the gains it has made against the U.S. dollar in the past two months and fall back toward its historic low within the next year, according to a Reuters survey of 36 foreign exchange analysts.
Over the last two months, the partially convertible rupee has strengthened by approximately 3%, breaking a five-month losing streak and achieving its largest monthly gain since November 2018. This recent appreciation has been supported by a weaker dollar and a renewed influx of foreign investment in Indian equities.
However, most analysts surveyed in the latest Reuters poll believe that the rupee’s recovery against the dollar will be temporary. Their forecasts are based on slowing economic growth and expectations that the dollar will not weaken much further in the coming months.
Additionally, the Reserve Bank of India’s anticipated interest rate cuts—expected to total 75 basis points, marking the shortest easing cycle on record—are likely to put additional mild downward pressure on the rupee, the analysts noted.
According to the poll, the rupee is expected to decline 1.9% to 87.18 per dollar within the next three months. Over the following six months, it is projected to trade at 87.50 and eventually depreciate by 2.6% to 87.80 by the end of March 2026.
“The rupee has appreciated due to an unexpected slide in the broad dollar index and year-end inflows. The fundamental view is still of weakness, especially on account of potentially higher U.S. tariffs that can hurt exports and warrant a weaker currency,” stated Dhiraj Nim, an FX strategist at ANZ.
“Beyond the tariff-related adjustment, the path for the USD/INR could gradually trend higher. There is no merit in letting the currency appreciate meaningfully, especially given the need to recoup lost foreign exchange reserves,” he further explained.
The analysts in the poll indicated that the rupee’s short-term outlook will be influenced by U.S. President Donald Trump’s anticipated reciprocal tariffs on key trading partners, set to be introduced on April 2. The potential impact of these tariffs on India’s exports and overall economic growth, which is already slowing, remains a significant concern.
Trump has previously identified India as having the highest average tariff rates among the United States’ major trading partners.
Michael Wan, a senior currency analyst at MUFG, highlighted that the main factor driving expectations for a weaker rupee is the likelihood that India’s economic growth will underperform current market forecasts.
“We think markets are underpricing the risks of reciprocal tariffs on India right now. While India is generally more domestically-oriented to begin with, reciprocal tariffs, if raised to a meaningful level, will still have a negative impact on India’s growth prospect in 2025,” he said.
