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Rupee May Fall to Rs.97 per Dollar by FY27-End: BMI Forecast

The Indian rupee could weaken further against the US dollar over the next two fiscal years, with BMI, a Fitch Solutions company, forecasting the currency at Rs 97 per dollar by the end of FY2026-27 and Rs 99 by the end of FY2027-28. The rupee is currently around Rs 95.4 per dollar and has already fallen nearly 4% since the start of the US-Iran conflict. Higher energy prices, global risk aversion and less favourable India-US interest-rate differentials are expected to keep pressure on the currency. High oil prices a key risk India's heavy dependence on imported energy remains a major concern. The country imports around 90% of its oil requirements, meaning a sustained rise in crude prices could widen the import bill and increase demand for dollars. BMI said the US-Iran conflict is likely to weigh on the rupee, although recent government measures aimed at attracting foreign capital could limit the extent of depreciation. The firm expects a lasting resolution to the conflict to ease some pressure later in the fiscal year. Interest rates and El Nio add to risks The India-US interest-rate gap is also expected to become less supportive for the rupee. BMI expects the US Federal Reserve to hold its policy rate at 3.75% through 2026 before cutting rates by 50 basis points in 2027. It expects the Reserve Bank of India to raise rates by 25 basis points in February 2027. A possible Super El Nio is another risk. Such a weather pattern could hurt agricultural exports and increase food imports. While India's large foodgrain reserves may offer some protection, perishable food products could remain vulnerable. Capital inflows offer some support Despite these risks, government and RBI measures to attract foreign investment could help stabilise the rupee. These include tax incentives for foreign investors, wider access to India's bond markets and subsidised foreign-exchange hedging facilities. BMI said these measures have helped attract around $40 billion in foreign portfolio investment inflows, reversing earlier outflows. India's strong services surplus and steady remittance inflows are also expected to provide support. Remittances currently cover nearly half of the merchandise trade deficit, helping keep the current-account deficit under control. AI and US tariffs pose longer-term risks BMI also flagged concerns over the impact of artificial intelligence on India's services exports. Sectors such as software engineering and call-centre operations could face disruption, with early signs already visible through hiring freezes and fewer entry-level jobs. Another risk comes from potential higher US tariffs linked to India's purchases of Russian crude. BMI said tariffs of up to 100% could hurt Indian exports and investor sentiment, particularly because the US is India's largest export market. The firm assigns a 35% probability to a US-Iran escalation scenario, which could push oil prices higher and increase pressure on the rupee. Overall, BMI expects the rupee to remain under pressure from energy costs, geopolitical risks and global uncertainty, although foreign capital inflows, remittances and India's services surplus should help prevent a sharper decline. ALSO READ: What enterprise value reveals about a company beyond share price

17 Aug 2026 4:32 pm