Stronger RBI reserves offer protection against abrupt Rupee losses, but MUFG expects depreciation pressure to persist into 2027.
The Indian Rupee’s recovery has left Goldman Sachs and MUFG’s 2027 forecasts pointing to renewed losses, despite stronger central-bank defences.
Goldman forecasts 97 Rupees per Dollar in six and twelve months, while MUFG projects 96.00 for March 2027 and 96.50 for June.
The US Dollar to Rupee exchange rate (USD/INR) slipped to 95.6039 on Tuesday, down 0.11% after Monday’s 0.29% decline, retreating from last week’s levels above 96.
The nearer-term comparison is more restrained: Goldman’s three-month forecast stands at 96, against MUFG’s 95.50 for December 2026, which allows slight Rupee appreciation from today’s rate.
RBI support limits the risk of a sudden fall
MUFG says foreign-currency deposit inflows have strengthened the Reserve Bank of India’s ability to manage volatility, but demand for Dollars persists:
“While the enlarged reserve buffer should contain disorderly moves, it does not remove the underlying demand for dollars from FDI repatriation and the strong IPO pipeline.”
That includes foreign investors converting proceeds from Indian investments back into foreign currency.
“Consequently, the balance of risks still favours gradual INR depreciation rather than a sharp adjustment.”
The inflows also created excess Rupee liquidity when banks exchanged their Dollars with the RBI, complicating efforts to contain inflation.
MUFG expects tighter policy:
“We expect 50bp of RBI tightening, split between December 2026 and February 2027, with a risk of a larger 75bp cycle.”
These depreciation forecasts contrast with Crédit Agricole’s anticipated Rupee recovery in 2027.
Oil remains a key obstacle for import-dependent India, despite its retreat from last week’s highs.
Brent traded near $101.64 earlier on Tuesday, leaving substantial energy-cost pressure in place alongside the higher US yields that MUFG identifies as another weight on the Rupee.
Our currency coverage draws on live market data, official economic releases and published bank research.
