The Indian rupee’s sharp slide toward the 92-per-dollar mark reflects mounting near-term pressures, but the currency is likely to stabilise and strengthen over the medium term, according to Abhishek Goenka, Founder of IFA Global and Billionz.
Speaking to ET Now, Goenka said the current fundamentals are working against the rupee, making short-term moves difficult to predict.
Why the rupee is under pressure
Goenka pointed to multiple headwinds weighing on the currency:
- Lack of dollar sales in the interbank market
- Exporters staying on the sidelines due to weak order visibility and margin pressure
- A gradual widening of the current account deficit (CAD)
- Capital account inflows failing to fully fund the CAD
Despite foreign portfolio outflows of nearly $19 billion last year and about $2.7 billion so far this year, the rupee has remained vulnerable. Recent market volatility, including selling triggered by news related to Adani Group, also led to a sharp intraday fall of 30–40 paise, he noted.
Medium-term outlook more constructive
While acknowledging near-term pain, Goenka said the medium-term outlook is more positive.
“From FY27, we expect the rupee to improve meaningfully, with the average likely to be below 90 per dollar,” he said, adding that on a relative valuation basis the rupee appears around 5% undervalued.
Including forward premiums, one-year forward levels are closer to 94.5–95, suggesting room for appreciation once conditions normalise. Progress on a trade deal, he said, could trigger a sharp rebound in the currency.
RBI’s stance: Managed flexibility
On whether the Reserve Bank of India should aggressively defend the rupee, Goenka said the central bank appears to be balancing growth, liquidity and currency stability.
Invoking the “impossible trinity”, he said the RBI has chosen to preserve domestic liquidity and support growth, even if it means allowing the rupee to weaken moderately. Dollar sales reduce system liquidity, and the RBI has already sold around $45 billion since October.
“The RBI will intervene in bouts, especially during thin liquidity, but it is also prepared to let the currency move if pressure builds,” he said, noting that other Asian currencies such as the Indonesian rupiah, Philippine peso and Korean won have also weakened recently.
Forex reserves and intervention strategy
Goenka said the RBI is likely to be cautious in deploying reserves, especially after diversifying part of its holdings into gold.
“With the global environment unsettled, the central bank will use reserves selectively—intervening when liquidity is thin and the impact is maximised,” he said.
Silver lining for exporters
A weaker rupee offers some relief to exporters, even as demand and margins remain under strain.
Export-oriented companies have already absorbed margin pressure to protect volumes and credit lines, Goenka said. Currency depreciation, combined with duty drawbacks, provides partial cushioning, especially as domestic inflation remains under control.
“A weaker rupee supports exporters and improves nominal GDP growth, which policymakers are prioritising right now,” he said.
Key takeaway
Goenka advised investors and businesses to focus on the medium-term trajectory rather than short-term volatility.
“The near term may remain tricky, but as external pressures ease and capital flows stabilise, the rupee should be better placed going forward,” he said.
