The Indian rupee has fallen to an all-time low, leading analysts to have differing opinions on its future trajectory. While some predict continued decline due to sluggish trade and portfolio inflows, others believe the worst may be behind, citing supportive valuations.
These divergent views reflect the complexity of the Indian economy, which faces challenges from U.S. trade tariffs and reduced foreign investment, yet simultaneously shows resilience domestically.
In a recent note, Goldman Sachs indicated that many of the external pressures impacting the rupee are likely already factored into the current exchange rate. They noted that the rupee now appears undervalued against both the dollar and on a trade-weighted basis. The bank compared the rupee’s recent decline to being caught in a “torrential monsoon,” affected by U.S. tariffs and increased visa costs for the technology sector.
As of now, the Indian rupee is the weakest currency among emerging Asian markets this year. BofA Global Research supported this view, stating that the rupee’s valuation has become attractive following its recent losses, forecasting a recovery to 86 per U.S. dollar by the end of 2025.
Nevertheless, some analysts caution against underestimating potential further declines, with possibilities of the rupee dropping toward 90 amid ongoing uncertainty regarding U.S. tariffs. HSBC’s head of Asia FX research, Joey Chew, mentioned that any delays in U.S.–India trade negotiations continue to exert pressure on the currency. He suggested that the rupee could climb back toward 87 if tariff reductions on Indian goods are implemented.
The rupee has depreciated by 3.7% against the dollar this year, with a recent quotation at 88.78, just shy of its lifetime low of 88.80 reached last week. MUFG forecasts that the currency will continue to struggle, expecting a decline to around 89.75 “over time.” They caution that prolonged tariffs could reduce India’s gross domestic product by up to 1%, thereby keeping capital inflows depressed.
(Reporting by Nimesh Vora and Jaspreet Kalra; Editing by Janane Venkatraman)
Published on October 10, 2025
