Indian rupee seen weakening toward 100-per-dollar level

Fund outflows and a rising energy bill are expected to keep putting pressure on India’s rupee, even as the central bank works to slow depreciation.

Over the last several days, the currency has recovered from 96.79 rupees per dollar to the 95-level, aided by the Reserve Bank of India’s latest measures. But while those will provide short-term relief, the currency is expected to weaken toward the end of the year and mid-2027, and a 100 rupee-per-dollar mark could not be ruled out, strategists said.

The RBI’s steps will slow the rupee’s depreciation, but they cannot “fully offset the fundamental pressures stemming from elevated oil prices, a wider current account deficit, and a challenging global capital flow environment,” Hanna Luchnikava-Schorsch, head of Asia-Pacific economics at S&P Global Market Intelligence, told CNBC.

Her firm sees the Indian currency trading around 97 per US dollar by end-2026 and at 98 rupees by mid-2027. Singapore-based Mizuho Securities also expects the rupee to slide to 98 rupees against the greenback by late 2026 and early next year, Vishnu Varathan, head of macro strategy for APAC at the firm, told CNBC.

“The RBI is determined to do whatever is necessary to ensure orderly movement in the foreign exchange market,” Sanjay Malhotra, the governor of the RBI, said in an interview with local Indian media outlet Moneycontrol on Tuesday.

On Saturday, the central bank announced measures that will make it expensive to take speculative bets on the rupee and restrict rebooking of cancelled foreign exchange derivative contracts.  It also opened a special window to meet the entire daily dollar requirements of three public sector oil marketing companies, ring-fencing this trade from spot markets.

The steps offer “short-term to medium-term stability, not long-term structural support,” Devarsh Vakil, head of research at HDFC Securities, told CNBC,

These steps come just months after the central bank in June launched a special scheme, known as the Foreign Currency Non-Resident (Bank) deposits, that offered incentives to non-resident Indians for making foreign currency deposits in Indian banks.

While this boosted the RBI’s foreign exchange reserves by $105 billion, global adverse conditions forced the central bank to make “aggressive” intervention in spot markets to counter the pressure on the rupee, global brokerage Nomura said in a report on Saturday.

Since the close of the program on Aug. 30, the rupee has fallen 1.9% against the dollar, and the RBI’s interventions to curb the decline “through dollar sales” have resulted in foreign reserves falling by $51 billion as of Oct. 2, Indian brokerage Ambit Capital said in a report on Wednesday.

FCNR-B, along with other currency swap…