Rupee may remain under pressure, experts warn of possible slide to 100 per USD
New Delhi, May 18
Currency experts have warned that the Indian rupee may continue to remain under pressure in the coming months due to rising crude oil prices, persistent foreign investor outflows, global uncertainty and geopolitical tensions.
Rupee has depreciated by around 6 to 7 per cent against the US dollar this year. The currency started the year near the 89 mark and has now fallen to a historic low beyond 96 per US dollar.
Experts said the pace of depreciation in recent weeks has raised concerns in financial markets.
K N Dey, Currency expert told ANI that the sharp fall in the rupee since May 11 has surprised market participants.
"The speed of the rupee's descent since May 11 has caught the market off guard, yet both the regulator and North Block have remained notably silent," he said.
According to Dey, aggressive selling by foreign institutional investors (FIIs) has been one of the major reasons behind the rupee weakness.
He said institutional investors have already pulled out Rs 2.65 lakh crore from Indian markets in 2026, close to last year's total outflow of Rs 3.04 lakh crore.
"This downward pressure is fuelled by aggressive FII capitulation," he stated.
Dey added that there is currently no clear indication of where the rupee may stabilise.
"With no bottom in sight, trying to forecast a stabilisation point is pure guesswork, and even a psychological slide to 100 is now on the table," he said.
Ajay Suresh Kedia, Director at Kedia Advisory told ANI, that the rupee continues to face sustained pressure because of strong dollar demand and rising crude oil prices.
"The Indian Rupee remains under sustained pressure as the dollar index stays firm near 99 while rising crude oil prices continue inflating India's import bill," Kedia told ANI.
He said higher energy prices have increased demand for dollars in domestic markets, while elevated US bond yields are strengthening the US dollar globally.
Kedia also pointed to persistent FII outflows and concerns over a weaker monsoon outlook as additional factors affecting sentiment towards the rupee.
According to him, the government's decision to raise gold and silver import duties may only have a limited impact in slowing the pace of rupee depreciation.
"RBI intervention is helping contain volatility, but the broader trend still points toward weakness," he said.
Kedia expects the rupee to trade in a broad range over the next six months.
"Over the next six months, the rupee is expected to trade within a range of 91.70-92.00 on the support side and 98.60-99.50 on the resistance side, with depreciation bias likely to persist amid global crude-led uncertainty," he added.
Former UN Advisor and economist Santosh Mehrotra also expressed concern over the impact of geopolitical tensions and external pressures on the Indian currency.
"What has happened in the last three months is that the rupee has gone from under 90 rupees to nearly 96 to a dollar. Now this is going to have its own inflationary impact," Mehrotra said.
He further warned that the rupee could "very easily" touch Rs 100 against the US dollar within a quarter if current pressures continue.
Experts believe that rising crude oil prices, global financial uncertainty, foreign investor selling and geopolitical tensions are likely to remain the key factors influencing the rupee's movement in the near term.
— ANI
Reader Comments
What's surprising is the silence from RBI and finance ministry. K N Dey is right - they should have stepped in earlier. Now we're all paying more for everything from fuel to imported electronics. My monthly grocery bill has gone up by 15% because of inflation linked to rupee weakness. 🇮🇳
As an American living in India, this is tough for us too. My salary is in dollars but all expenses are in rupees. The flip side is that Indian exports and IT services are getting more competitive globally. Still, seeing the rupee slide so fast is worrying for everyone.
Honestly, this was predictable. We saw FIIs pulling out Rs 3 lakh crore last year and now another Rs 2.6 lakh crore this year. The geopolitical tensions with China and Russia-Ukraine war are not helping. But I think RBI is doing decent job containing volatility. Let's see if they can stabilize near 98-99 range as Kedia suggests.
My parents back in the UK always ask me how the rupee is doing. They don't understand why it keeps falling. The rising crude oil prices and strong dollar are the main culprits. But I think the government raising gold import duties is a good step - it might help slow the bleeding.
You know what, I think the real problem is our dependency on imports - crude oil, gold, electronics. Until we become self-reliant in these areas, the rupee will always be vulnerable. Atmanirbhar Bharat is not just a slogan, it's an economic necessity. Having said that
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