MUFG Forecasts Rupee at 96.00 by March 2027 Despite RBI Support
MUFG projects the Indian Rupee will weaken to 96.00 by March 2027, citing persistent dollar demand and high energy costs.
Key points
- MUFG forecasts the Rupee will reach 96.00 per Dollar by March 2027.
- The RBI is expected to raise rates by 50 basis points by February 2027.
- Brent crude prices near $101.64 continue to pressure India's import bill.
MUFG projects the Indian Rupee will weaken to 96.00 by March 2027. This forecast assumes persistent dollar demand despite central bank interventions.
The currency slid to 95.6039 on Tuesday. This follows a 0.29% drop on Monday and a retreat from levels above 96.
Dollar Demand Drives Depreciation Pressure
Foreign investors are converting proceeds from Indian investments back into foreign currency. This structural flow creates continuous pressure on the Rupee exchange rate.
A strong IPO pipeline further increases the need for dollar liquidity. These factors outweigh the stabilizing effect of recent reserve inflows.
RBI Reserves Limit Sudden Volatility
Exchange Rates UK notes that enlarged reserves help contain disorderly market moves. However, these buffers do not eliminate the underlying need for dollars.
The bank expects the RBI to tighten policy by 50 basis points. This adjustment is split between December 2026 and February 2027.
Energy Costs And Yields Weigh
Brent crude traded near $101.64 earlier on Tuesday. High energy costs remain a significant burden for import-dependent India.
Higher US yields also act as a weight on the Rupee. These factors combine to support a gradual depreciation path rather than a sharp adjustment.
