Exchange Rates UK Research’s latest May 2026 survey of major investment banks suggests the USD/INR exchange rate may have limited upside from current levels near 95.4, with the majority of forecasts pointing towards a gradual decline over the coming two years.
While a handful of institutions expect USD/INR to remain close to 96–97, several major banks project a broader retreat towards the 90–93 range, implying a stronger Indian rupee over the medium term.
The survey average points to USD/INR remaining near current levels during the remainder of 2026 before drifting lower through 2027 and 2028.
Latest Survey Suggests USD/INR Rally May Be Maturing
The latest Exchange Rates UK Research poll reveals a notable divide between banks that expect the US dollar to retain its strength against the rupee and those forecasting a more meaningful correction lower.
Danske Bank, Goldman Sachs and MUFG all see USD/INR remaining close to current levels around 95–97, reflecting expectations that the dollar will continue to benefit from relatively high US interest rates and resilient economic growth.
However, RBC Capital Markets, SEB and Westpac forecast a much stronger rupee, with projections falling into the low-90s and, in Westpac’s case, below 90 by 2028.
Taken together, the survey suggests the extraordinary rise in USD/INR seen over recent years may be approaching a more mature phase.
The pair currently trades near all-time highs after climbing from around 75 in 2022 to above 95 in 2026. That move reflected a combination of broad US dollar strength, rising US yields, higher energy prices and persistent capital flows into dollar assets.
More recently, however, momentum has slowed. USD/INR has spent much of 2026 consolidating around the mid-90s rather than extending its previous uptrend.
India’s Growth Story Continues to Support the Rupee
A recurring theme across the latest bank forecasts is confidence in India’s long-term economic outlook.
India remains one of the world’s fastest-growing major economies, attracting substantial foreign investment into manufacturing, technology and infrastructure projects. Strong domestic demand and continued economic expansion have helped underpin confidence in the rupee despite periods of global market volatility.
At the same time, India has benefited from efforts to diversify global supply chains, with many multinational firms increasing investment in the country as part of broader manufacturing shifts away from China.
The Reserve Bank of India has also maintained a reputation for active currency management, helping limit excessive rupee volatility even during periods of significant US dollar strength.
Against this backdrop, several banks believe structural growth trends should gradually support rupee appreciation over the medium term.
Indian Rupee Outlook: Banks Expect Stability First, Then Gradual INR Strength
The latest Exchange Rates UK Research survey suggests USD/INR is unlikely to experience the kind of rapid moves seen in more volatile currency pairs.
Instead, most institutions expect a gradual adjustment process.
Near-term forecasts cluster around current levels, reflecting uncertainty surrounding Federal Reserve policy, oil prices and global growth. Longer-term projections, however, increasingly favour rupee appreciation as India’s economic fundamentals continue to strengthen.
The key question for markets is whether the US dollar can maintain the exceptional gains achieved since 2022.
For now, we forecast that while the USD/INR exchange rate may remain elevated through the remainder of 2026, the balance of institutional forecasts increasingly points towards a slower and more gradual decline thereafter.
