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The median forecast from 37 foreign exchange strategists polled by Reuters between November 2 and 4 sees the rupee, currently trading near 94.70 per dollar, weakening over the coming months. Pressure is expected to persist from higher oil prices affecting India as the world’s third-largest energy importer together with record foreign investor outflows that show few signs of abating. The local currency has declined 5 percent so far this year and reached an all-time low of 96.96 in May while RBI interventions have helped limit the slide at times.
Upasana Chachra, chief India economist at Morgan Stanley, said in the survey that trends in capital flows were unlikely to change meaningfully in the near term. “We don’t really see FII (foreign institutional investors) equity or the trends in capital flows changing meaningfully in the near term, and that will remain a pressure point for the rupee… and that’s why we have this slight depreciation bias,” Chachra stated. The outlook comes after the rupee touched a two-week high on Wednesday following news that US Democrats had captured majorities in both the Senate and House.
A Reuters assessment found that the combination of volatile external conditions and sustained outflows is unlikely to ease fully even with a weaker US dollar and policy steps by the Reserve Bank of India. The central bank has deployed interventions in the spot and forward markets while introducing measures aimed at attracting dollar inflows to support reserves. Those steps have helped stabilise the unit temporarily but at the cost of higher hedging expenses for foreign investors.
Apoorva Javadekar, chief economist at Shriram Group, noted that recent RBI policies have made re-entry more challenging for foreign institutional investors. “FII re-entry has become that much more difficult. So, in some sense, RBI policy has stabilized the rupee at the cost of both FII flows and forward prices,” Javadekar said. Business Today figures show foreign portfolio investors sold Rs 35,861 crore in Indian equities in September and an additional Rs 25,126 crore in early October, contributing to total equity outflows of Rs 2.85 lakh crore so far in 2026.[[1]](https://www.businesstoday.in/latest/economy/story/bt-big-story-why-forex-reserves-fell-50-bn-in-a-month-despite-record-fcnrb-inflows-560516-2026-10-09)
India’s foreign exchange reserves have declined by more than $50 billion in the past month despite record inflows through the FCNR(B) deposit scheme, according to separate economic reporting. The Mint analysis pointed to a structural shift in which global financing conditions, scarcer risk capital and altered rupee behaviour have amplified pressure on the currency even as the current account deficit has narrowed below 1 percent of GDP. Such dynamics have entrenched expectations of depreciation amid ongoing geopolitical factors and portfolio allocation shifts.[[2]](https://www.livemint.com/opinion/online-views/indias-external-constraints-havent-disappeared-they-are-shapeshifting-11793626981089.html)
The RBI’s latest actions, including adjustments that raised the cost of hedging against rupee losses, are seen limiting fresh commitments from overseas investors in the short term. Analysts anticipate that without a meaningful recovery in equity inflows or easing of oil import costs the rupee will face continued headwinds into the first half of 2027. The poll results underscore how external vulnerabilities have evolved even as India’s broader economic fundamentals have strengthened relative to a decade ago.
