Rupee expected to appreciate a bit, to hover around 85-86 per US dollar

Rupee is expected to appreciate a bit and stabilise around 85-86 a dollar in the coming weeks with RBI's continued focus on stability of the domestic currency, Deloitte economist Rumki Majumdar said.

She said that the rupee may not now see the level of 83 despite RBI's intervention and the Indian currency being more stable than others.

The rupee tanked last week to hit its all-time low of 86.70 against the US dollar as massive foreign fund outflows and falling domestic equity markets dented investor sentiment. The rupee on January 13 logged its steepest single-day fall in nearly two years and ended the session 66 paise down at its historic low of 86.70 against the US dollar. The currency's previous record one-day fall of 68 paise was witnessed on February 6, 2023.

The domestic currency has depreciated by over 1 per cent in 2025 so far following a nearly 3 per cent decline in 2024 due to a strong dollar and FII outflows. The rupee closed at 86.60 a dollar on Friday.

"I was quite confident to say that the rupee might be holding at 83-84 six months back, but given the uncertainty we have it should now stabilise at 85-86 against a dollar," she told PTI.

The dollar has been gaining strength in the run-up to the US president-elect Donald Trump's oath-taking ceremony on January 20. To manage steep volatility in the forex market, the RBI has routinely stepped in by selling US dollars in the forex market to arrest rupee depreciation.

As a result, India forex reserves came down from a high of USD 704.88 billion at the end of September to USD 625.871 billion in the week ended January 10.

There is definitely a flight towards the US and the fact that investors want to move to a safer haven have caused the dollar index to move up from 97 to 108 in the span of the last three months, she said.

She, however, said the Indian currency is more stable than other currencies against the dollar.

Observing that exporters need stability on the rate front, she said, RBI would ensure stability as it helps them to book forward contracts.

According to EY Chief Policy Advisor DK Srivastava, the government, in the forthcoming Budget, could consider levying higher tariffs on imports to check the significant decline in rupee value witnessed in the past few months.

The noted economist argued that higher import duties would curb the demand for dollars from importers and help arrest the sliding value of the rupee.

The sudden downward movement of the rupee against the US dollar is going to be a challenge for policymakers -- for Budget makers on the fiscal side and the RBI on the monetary side. The expectation is that the US economy is going to recover, and therefore, a lot of financial resources are moving to the world's largest economy, he added.