The Crossbill News Desk
The Indian rupee could weaken further against the US dollar over the next two financial years, with elevated energy prices, heightened global risk aversion and narrowing interest-rate differentials expected to weigh on the currency, according to BMI, a Fitch Solutions company.
BMI has projected that the rupee could decline to Rs 97 against the dollar by the end of FY 2026-27, which concludes in March 2027. It expects a further weakening to Rs 99 per dollar by the end of FY 2027-28, news agency PTI reported.
The projection comes as the rupee continues to remain under pressure. According to BMI, the currency has already weakened by around 4% since the outbreak of the West Asia crisis.
The rupee extended its decline on Tuesday (August 18), falling 7 paise to 95.68 against the US dollar in early trade. On Monday, it had weakened 19 paise to close at 95.61 per dollar.
Market concerns have also increased following the Reserve Bank of India’s decision to advance the closure of its Foreign Currency Non-Resident (Bank) or FCNR(B) swap facility. The move has prompted questions over the availability of future dollar inflows and the impact on domestic liquidity.
Under the revised schedule, the facility will cover only FCNR(B) deposits mobilised until August 31, 2026, while banks can undertake swaps with the RBI until September 11. Earlier, banks were permitted to mobilise deposits until September 30 and access the swap facility until October 16.
The change has also influenced the bond market. Yields on five-year and three-year bonds had risen amid increased demand from commercial banks, particularly foreign lenders, seeking to deploy liquidity generated through FCNR(B) inflows. The five-year bond yield rose by 8 basis points, while the three-year bond yield increased by three basis points.
“The rupee was under noticeable pressure, with the currency trading around 95.60-95.62 a dollar. The immediate trigger is the RBI’s decision to bring forward the closure of its concessional FCNR(B) forex-swap facility to August 31, which surprised the market and raised concerns over the scale of future dollar inflows,” said Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors, reported Business Standard.
The currency outlook will now depend on several factors, including energy prices, capital flows, global investor sentiment and the interest-rate gap between India and the US. With these pressures persisting, BMI expects the rupee to remain on a weakening trajectory through the next two financial years.
BMI has projected that the rupee could decline to Rs 97 against the dollar by the end of FY 2026-27, which concludes in March 2027. It expects a further weakening to Rs 99 per dollar by the end of FY 2027-28, news agency PTI reported.
The projection comes as the rupee continues to remain under pressure. According to BMI, the currency has already weakened by around 4% since the outbreak of the West Asia crisis.
The rupee extended its decline on Tuesday (August 18), falling 7 paise to 95.68 against the US dollar in early trade. On Monday, it had weakened 19 paise to close at 95.61 per dollar.
Market concerns have also increased following the Reserve Bank of India’s decision to advance the closure of its Foreign Currency Non-Resident (Bank) or FCNR(B) swap facility. The move has prompted questions over the availability of future dollar inflows and the impact on domestic liquidity.
Under the revised schedule, the facility will cover only FCNR(B) deposits mobilised until August 31, 2026, while banks can undertake swaps with the RBI until September 11. Earlier, banks were permitted to mobilise deposits until September 30 and access the swap facility until October 16.
The change has also influenced the bond market. Yields on five-year and three-year bonds had risen amid increased demand from commercial banks, particularly foreign lenders, seeking to deploy liquidity generated through FCNR(B) inflows. The five-year bond yield rose by 8 basis points, while the three-year bond yield increased by three basis points.
“The rupee was under noticeable pressure, with the currency trading around 95.60-95.62 a dollar. The immediate trigger is the RBI’s decision to bring forward the closure of its concessional FCNR(B) forex-swap facility to August 31, which surprised the market and raised concerns over the scale of future dollar inflows,” said Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors, reported Business Standard.
The currency outlook will now depend on several factors, including energy prices, capital flows, global investor sentiment and the interest-rate gap between India and the US. With these pressures persisting, BMI expects the rupee to remain on a weakening trajectory through the next two financial years.
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