Currency experts at MUFG project USD/INR to rise from around 94.7-94.8 to 95.50 this year and 96.50 by Q2 2027, despite stronger RBI support.
The Indian Rupee weakened to around 94.7-94.8 per Dollar on Tuesday, surrendering part of last week’s gains as Brent crude approached $98 and foreign investors resumed selling Indian assets.
Foreign exchange analysts at MUFG project USD/INR to reach 95.50 in Q4 2026, followed by 96.00 in Q1 2027 and 96.50 in Q2.
That final forecast implies approximately 1.9% upside from the current price of 94.69 and suggests RBI intervention will slow, rather than eliminate, the underlying depreciation pressure.
State-run banks were again seen selling Dollars around 94.70 on Tuesday, extending a sustained period of intervention by the Reserve Bank of India.
The intervention has been backed by unexpectedly large foreign-currency inflows generated through the RBI’s FCNR(B) measures.
MUFG said the programme had attracted more than $130bn by the end of August, giving the authorities “meaningful firepower and ammunition”.
Official RBI data show that India’s foreign-exchange reserves reached a record $740.8bn on August 28, including $600.7bn of foreign-currency assets.
The larger buffer reduces the danger of a disorderly Rupee decline, but it does not necessarily change the direction of travel.
“Existing foreign-currency inflows have enlarged India’s external buffer and curtailed the risk of sharp INR depreciation, but the removal of incremental liquidity support, accelerating credit growth and the lagged inflationary effects of earlier oil-price increases point towards higher INR rates.”
Oil Brings 95.50 Back Into View
The renewed rise in crude prices has made MUFG’s higher USD/INR path more relevant.
Brent near $98 increases India’s import bill and the associated demand for Dollars, while overseas investors have sold a net $1.2bn of Indian equities and bonds during September.
When we last examined MUFG’s Rupee forecast, USD/INR was approaching the bank’s former 94.00 target despite oil trading near $96.
The Rupee subsequently strengthened further as the RBI absorbed Dollar inflows, but the latest oil shock has interrupted that move.
MUFG had described 94 as a temporary destination rather than the beginning of a sustained Rupee appreciation cycle.
“We are currently forecasting USD/INR to move towards 94.00 over the next three to six months, before rebounding towards 96.00 next year as structural portfolio outflows, corporate repatriation and import demand reassert themselves.”
The rebound is now expected to begin from a slightly higher level, with 95.50 forecast before the end of 2026 and 96.50 by the second quarter of next year.
Currency analysts at MUFG also expect 50 basis points of RBI tightening from December.
“We continue to expect 50bp of RBI tightening beginning in December, with the central bank focused on limiting excessive FX volatility rather than engineering sustained rupee appreciation.”
Oil prices, RBI Dollar sales and the September 11 US inflation report will determine whether the USD to INR exchange rate remains contained below 95 or begins moving towards MUFG’s 95.50 forecast.
Our currency coverage draws on live market data, official economic releases and published bank research.
