By Pranoy Krishna
BENGALURU (Reuters) -The Indian rupee will claw back some of its recent losses against the dollar on hopes the U.S. and India agree a trade deal, according to a Reuters poll of FX analysts who however said the currency could end the year weaker than they currently forecast.
Most Asian currencies have gained in 2025 against a softer dollar except for the rupee, which has slid more than 3.5% as global investors pulled money from Indian markets. This is despite the economy registering robust 7.8% growth in the April-June quarter.
Unsettled by Washington’s punitive 50% tariffs on Indian goods, foreign investors have sold over $17 billion of Indian equities this year, sinking the rupee to record lows.
However the Reserve Bank of India’s regular interventions to smooth volatility have shielded the rupee from steeper losses.
The partially convertible rupee was forecast to rise nearly 0.9% from current levels to 88.00 per dollar by end-December, and then be marginally stronger at 87.94 by end-March 2026 and trade around that level in a year, according to the median view of 38 FX analysts polled between September 26-30.
“I’m still expecting some easing of the U.S.-India trade tensions, that could be a bit of a transient boost for the rupee…(but) a lot of the developments in the U.S. foreign and trade policy have meant the risks central to India are more pronounced,” said Dhiraj Nim, FX strategist at ANZ Bank.
“The fact domestically your growth cycle seems to be shifting in a lower gear…explains why equity flows remain weak and they could remain weak.”
Predictions of rupee appreciation have repeatedly backfired over the past decade with the rupee strengthening against the dollar only once in that period- in 2017.
Twelve of 15 economists who responded to an extra question said the rupee is more likely to end the year weaker than their baseline forecasts, rather than stronger, highlighting risks to their outlook.
“Every day if you have a flip-flop on trade policy…you don’t know how the board is being laid every day. So that uncertainty is there, and your forecasts are bound to be wrong,” said Aditya Vyas, chief economist at STCI Primary Dealer Limited, when asked why analysts are getting the rupee outlook wrong.
Vyas predicts the rupee to hit 91.20 in a year.
A separate Reuters poll conducted in September showed the Reserve Bank of India is likely to hold its key interest rate at 5.50% on October 1, though some economists said a cut to 5.25% cannot be ruled out.
Analysts said if the RBI surprises markets with a rate cut, the rupee could come under further pressure.
(Other stories from the October foreign exchange poll)
(Reporting by Pranoy Krishna, Polling by Rahul Trivedi and Devayani Sathyan, editing by Hari Kishan and Ros Russell)
