Rupee's Historic 16-week Slump Continues, 87 Mark Likely Soon
The Indian rupee reached a record low against the US dollar. As of this report, the rupee was valued at 86.40 against the US dollar. Analysts predict that the rupee's instability indicates it may decline to 87 by the end of March.
Based on current volatility patterns, there is an 80 percent likelihood that the currency will drop to 87 percent by the end of March, up from 27 percent a month ago, according to Akshay Chinchalkar, Head of Research at Axis Securities.
Akshay mentioned that the increase in treasury yields and the spike in crude oil prices have negatively impacted the outlook for the Indian currency. The rupee has experienced a continuous decline for 16 weeks, marking an unprecedented event in its history.
Today, the Indian rupee surpassed the 86-mark as a result of increasing Treasury yields and the global dollar's rise driven by a spike in oil prices, worsening the rupee's prospects. Offshore markets persist in wagering against the rupee via options, as the dollar-rupee out-of-the-money call saw significant activity last week.
The rupee has now declined for 16 straight weeks, an unprecedented occurrence in its history. Financial and market analysts have varying opinions, indicating that the rupee is facing challenges against other international currencies. In 2024, it has surpassed other emerging markets (EMs).
The rupee is under pressure similar to other global currencies. It performed relatively better than other emerging markets in 2024. In 2025, the trend of US economic and bond yield exceptionalism is continuing, resulting in a stronger US dollar and weaker global currencies, according to banking and market expert Ajay Bagga.
In recent months, the Indian rupee has faced significant pressure due to several domestic and international influences. These factors include slow economic growth in India, the withdrawal of foreign investors from Indian stocks, and the strengthening of the dollar index following Donald Trump's tariff plans announcement. The US dollar index rose to 109.98, marking its highest point since November 2022.