BMI projects the Indian rupee could weaken to 97 per US dollar by 2026-27 and to 99 by 2027-28, citing global uncertainties, high energy costs, and US-Iran tensions as key factors influencing the currency’s trajectory.
BMI has turned more cautious on the Indian rupee, saying the currency could slide to 97 per US dollar by the end of fiscal 2026-27 and to 99 by the end of fiscal 2027-28 as global risks, costly energy imports and less favourable interest-rate gaps weigh on sentiment. The Fitch Solutions unit said the rupee is already under pressure from the US-Iran conflict, with the currency having weakened by about 4% since tensions escalated.
The latest view is notably weaker than BMI’s earlier expectation that the rupee would trade broadly around 95 per dollar by the end of 2026. Other market observers are also leaning bearish: a Mint poll of 10 banks, brokerages and economists pointed to end-2026 forecasts mostly in the 96-98 range, while Bank of America’s Rahul Bajoria has warned the currency could move towards 98 this year and 99 over the next 12 months even if the Middle East conflict eases.
BMI said India’s dependence on imported oil remains a central weakness, particularly if Brent crude stays elevated. It also flagged the risk of a stronger El Niño pattern, which could hurt farm output and lift food-import demand, although the country’s foodgrain reserves should offer some protection. The firm added that India’s services surplus and remittances continue to support the external balance, with remittance inflows still covering a large share of the merchandise trade deficit.
Policy support, meanwhile, may slow the decline rather than reverse it. BMI said tax cuts for foreign investors, wider access to bond markets and subsidised currency hedging have already helped bring in about $40bn in portfolio inflows, while the Reserve Bank of India is expected to focus on reducing volatility rather than pushing the rupee higher. Even so, the firm warned that a deeper US-Iran conflict, a spike in oil prices or fresh tariff threats from the United States could all put further pressure on the currency.
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