The Indian rupee weakened again at the start of the week, with he US Dollar to Rupee exchange rate (USD/INR) trading at 89.5997 (+0.27 percent), extending a soft run that has pushed the pair above 89 despite strong performance across other high-carry currencies.
Recent moves, including last week’s drift from 89.15 to 89.35, reflect a market adjusting to a central bank that is allowing more day-to-day volatility.
Goldman Sachs says this shift aligns with the IMF’s latest Article IV assessment, which reclassified India’s de facto exchange-rate regime from “stabilized” to “crawl-like.”
The bank stresses that this does not imply a loss of control, but rather signals an RBI willing to tolerate a bit more currency movement while still smoothing extremes.
Goldman remains more constructive on the underlying fundamentals than market sentiment implies.
India’s 8.2 percent Q3 growth and record-low October inflation paint a far stronger macro picture than the currency’s performance would suggest.
The bank expects this strength to show up more in equities than in the exchange rate, arguing that undervaluation, solid growth and low inflation make stocks attractive after a difficult year.
For the rupee itself, Goldman sees a “crawling, not falling” profile.
The bank expects the RBI to rebuild FX reserves on USD/INR dips, keeping the currency more rangebound than directional.
In their view, outright appreciation is unlikely, but sustained depreciation is also not the base case as long as fundamentals remain firm.
