The Indian Rupee (INR) is anticipated to undergo a gradual depreciation against the US Dollar (USD), potentially crossing the significant psychological benchmark of ₹90 per dollar by March 2026. This forecast, issued in a report by the Union Bank of India, suggests that the currency’s path will be dictated by a mix of underlying economic fundamentals, technical trading patterns, and global risks.

Long-Term Depreciation Drivers

The core view of the report maintains that the broader trend of rupee depreciation, which has been evident in recent years, is likely to continue into the next year. This trajectory is supported by long-term fundamental factors.

A critical risk factor highlighted in the analysis is the potential impact of geopolitical tensions and new tariff announcements. These global developments are expected to be key in shaping investor sentiment towards the currency.

On the technical front, if the Rupee breaks decisively past the resistance level of ₹88.80 per dollar, it could trigger accelerated weakness, pushing the currency swiftly toward the ₹89.30 mark.

Potential Upside and Support

While the long-term outlook favors weakening, the report identifies several potential factors that could provide temporary strength or support the INR:

• Trade Progress: Concrete advances in India–US trade negotiations, especially the finalization of a trade deal, could trigger significant foreign inflows, estimated at $2–3 billion.
• Equity Inflows: Sustained and substantial foreign equity investments into the Indian markets would lend strength to the currency.

If these supportive factors materialize, the Rupee could see an appreciation towards ₹87.80 per dollar, with the ₹88.30 level acting as a key intermediate support.

Near-Term Forecast and Supporting Data

In the immediate future, the Rupee is expected to trade within a relatively narrow range, exhibiting a mild appreciation bias. This short-term stability is attributed to a consolidating US Dollar Index (DXY) and cautious foreign portfolio flows, which are balancing against relatively high domestic equity valuations.

Other favorable domestic and global data points supporting the Rupee in the near term include:

• Crude oil prices remaining low (Brent crude below $64 per barrel).
• A recent low domestic Consumer Price Index (CPI) print of 0.25% year-on-year for October.
• Increased expectations for a possible interest rate cut by the Reserve Bank of India (RBI) in December.
• Consistent domestic investment through Systematic Investment Plans (SIPs).

Globally, market participants will be monitoring key upcoming data from the US—including retail sales, trade balance figures, jobless claims, Federal Open Market Committee (FOMC) minutes, and flash Purchasing Managers’ Indices (PMIs)—to gauge the near-term strength of the US Dollar, which will invariably influence the INR.