MUFG Stands Firm on Rupee Depreciation Expectations

The Indian Rupee's recovery has been short-lived, as MUFG still expects depreciation pressures to persist into 2027. Despite stronger RBI reserves offering protection against abrupt losses, MUFG forecasts a decline in the Rupee's value.

Globally, the US Dollar to Rupee exchange rate slipped to 95.6039 on Tuesday, down 0.11% after Monday's 0.29% decline. This is below last week's levels above 96. Goldman Sachs and MUFG both project losses for the Indian currency in 2027, with MUFG predicting a value of 96.00 by March next year and 96.50 by June.

The RBI's increased reserve buffer has contained disorderly moves in the market, but MUFG notes that underlying demand for dollars persists due to foreign-currency deposit inflows and strong IPO pipelines. This includes foreign investors converting proceeds from Indian investments back into foreign currency.