The rupee is under pressure for the past couple of sessions. In fact the currency hit all-time lows of 89/$ recently. Though the rupee rebounded from its all-time low to close 4 paise higher at 88.72 (provisional) on Friday against the US dollar, but the pain may not end here. As per prediction by S&P, there is possibility of the rupee slipping all the way past the 90.$ mark over next two years.
Rupee seen sliding to 91 against US dollar by FY29: S&P
The ratings agency S&P Global Ratings highlighted that the Indian rupee is among those Asian currencies that have been weakening against the US dollar year-to-date. The agency predicts that the depreciation may continue further, with the exchange rate moving from 88.0 against the US dollar in FY25 to 91.0 in FY29.
S&P noted that China is better positioned and India’s condition is worse. “US tariffs on imports from different Asian economies will matter for their export outlook and their role in regional supply chains. Compared to our June assumptions, China has so far come out a bit better, relative to other Asian economies, and Southeast Asian emerging markets a bit worse. India has come out significantly worse, and the region’s developed economies broadly unchanged,” it noted
S&P expects RBI rate cut by 25 bps this fiscal
In the report S&P also said it expects a 25 bps rate cut by the RBI this fiscal as it revised its inflation forecast down to 3.2 per cent for this fiscal year. The Reserve Bank of India (RBI) is scheduled to meet for its fourth meeting on Sept 29–Oct 1.
The rating agency also retained India’s GDP growth forecast at 6.5 per cent in the current fiscal, citing strong domestic demand amid a largely benign monsoon.
“We forecast India’s GDP growth to hold steady at 6.5 per cent this fiscal year (year ending March 31, 2026). We expect domestic demand to remain strong, supported by a largely benign monsoon season, cuts in the income and the goods and services tax, and accelerating government investment,” S&P said in a statement.