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The Indian rupee, which has been under pressure for a host of reasons, is unlikely to depreciate further in the near term, Union Bank of India said in a report, providing a rationale that the rupee has already weakened by roughly 4 per cent this year.
"Given that the rupee has already weakened by roughly 4 per cent this year, we do not expect significant further depreciation in the near term," the report read. The Indian rupee vis-a-vis the US dollar is currently trading in a tight range, under pressure from a mix of domestic strength and external challenges, including US tariffs and persistent capital outflows. The currency has weakened 4 per cent since the start of 2025, touching a record low near 89.4950 recently, amid FII outflows exceeding USD 14 billion and a likely widening CAD (current account deficit). The strength in the US dollar and the delay in the India-US BTA first tranche are also weighing on the rupee. That said, according to the Union Bank of India report, easing inflation and GST-related reforms are offering some support to the Indian currency. "With uncertainty around the agreement now a key driver for the rupee, we continue to expect that once the deal is finalised, the appreciation threshold for the currency should shift," the report noted. From a technical standpoint, the rupee is expected to remain range-bound between Rs 88.80 and Rs 89.50 through the end of December, it is forecast. "Sustained domestic equity inflows or tangible progress in India-US trade negotiations could strengthen the INR toward Rs 88.50/$, with Rs 88.80/USD acting as a key interim support," it added. It continued that if an India-US BTA is finalised, accompanied by an RBI rate cut and a revival in FII inflows alongside anticipated US Fed rate cuts, weakening the dollar globally, the appreciation threshold for the Indian rupee could shift meaningfully. Conversely, any bearish signal rupee is likely to face strong resistance near Rs 89.50, while selling pressure intensifies. A clear break above this zone could trigger a swift move toward Rs 89.90. "Overall, geopolitical and tariff developments will remain central drivers of market sentiment," it cautioned. As per reports, the Indian rupee closed at 89.4575, shy away from its record low of 89.49 hit around a week ago. (ANI)
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