BS Poll: Rupee may stay under 95 against the dollar till September

After witnessing a 4.17 per cent depreciation against the dollar since the onset of US-Iran war in the last week of February, the rupee is expected to trade around 94.88 per dollar by September-end, according to the median of a Business Standard poll. The majority of the respondents expect the local currency to retain an appreciation bias over the coming quarter as the impact of the announced measures gradually translates into stronger capital inflows.

 

The rupee on Friday surged by 0.9 per cent to witness its highest single day gain in the two months since April 2, after the Reserve Bank of India (RBI) announced measures to attract foreign flows. It also marked the rupee’s third highest single day gain in the current calendar year. 

The local currency settled at 94.94 per dollar, the highest since May 8, against the previous close of 95.79 per dollar.  Respondents said a part of the capital flows that come in could be utilised by RBI to reduce its forward book size, which might limit gains for the domestic unit. The central bank’s outstanding net short dollar position in the forward market stood at $95.30 billion at April end. 

“Policy measures to improve capital inflows are expected to temper currency movements. Post September it will ease out and trade numbers will play out,” said Madan Sabnavis, chief economist at Bank of Baroda. 

However, some respondents expect that the rupee will continue to remain under pressure despite the recent measures. They argue that steps taken by the government and RBI to attract foreign capital may not generate meaningful inflows in the current environment. With US interest rates expected to remain elevated amid persistent inflationary pressures, the relative attractiveness of Indian assets could remain constrained. 

“All the measures that the central bank and government is taking to attract flows might not attract significant capital flows in the current environment of high US rates which are expected to be higher as US inflation remains sticky on the upside,” said Aditya Vyas, chief economist at STCI Primary Dealer. 

The September quarter has historically been seasonally weak for the rupee, while the December quarter has typically been stronger. Respondents expect some reversal of the year's depreciation trend in the final quarter, leading to a modest recovery in the currency. 

Abhishek Goenka, founder and chief executive officer of IFA Global, said even if the West Asia tensions are set aside, several other risks remain on the horizon. These include the possibility of an artificial intelligence (AI)-driven market bubble bursting, stress in the private credit market, and the impact of a weak monsoon on the domestic economy. 

The rupee has depreciated by 5.34 per cent in the current calendar year 2026, while it has witnessed 0.14 per cent depreciation in the ongoing financial year 2026-27.