The Indian rupee may enter a period of near-term stability as the US dollar’s recent strength begins to ease and foreign inflows return to Indian markets, according to Emkay Wealth Management’s latest Press Navigator report. The firm also anticipates a modest appreciation in the currency if the current momentum in domestic equities continues.
Why the dollar surge may not last
Emkay Wealth explained that the dollar’s recent 1% rise was largely temporary, driven by short-term global trade concerns and uncertainty around US interest rate policy. Over the past year, the US dollar has weakened by around 4.8% against major global currencies.
With the US 10-year Treasury yield now below 4%, markets appear to have already priced in potential rate cuts, suggesting that the dollar’s upward movement may be nearing its limit. “These indicators point to a phase where the dollar may lose momentum, helping emerging market currencies like the rupee find stability,” the report noted.
How India’s external environment is shifting
The rupee, which hit a low of ₹88.80 per US dollar in early October before recovering to ₹87.70, has been under consistent pressure since late 2024 due to a widening trade deficit and persistent FII outflows.
Emkay highlighted that recent positive FII inflows could act as a stabilising factor in the coming weeks. However, the firm cautioned that volatility in trade and global interest rate trends remains a risk to near-term performance.
India’s merchandise trade deficit climbed to a 13-month high of $32.15 billion in September, driven by higher imports of gold, silver, fertilizers, and electronics. Meanwhile, exports have remained weak, partly due to increased US tariffs on key sectors like textiles and gems and jewellery.
For the first half of FY26, the trade deficit stood at $154.98 billion, reflecting the growing imbalance between imports and exports.
What to expect next
Emkay Wealth expects the rupee to appreciate modestly towards ₹87.20–₹87.30 if the trend of equity inflows continues. The firm also advised corporates to hedge all near-term receivables and payables to safeguard against potential volatility arising from global trade shifts and fluctuating interest rates.
Overall, Emkay’s outlook suggests that while external risks remain, the rupee is poised to regain some balance in the short term as the dollar’s rally cools and investor confidence in India strengthens.
Also read: Viksit Workforce for a Viksit Bharat
Do Follow: The Mainstream formerly known as CIO News LinkedIn Account | The Mainstream formerly known as CIO News Facebook | The Mainstream formerly known as CIO News Youtube | The Mainstream formerly known as CIO News Twitter
About us:
The Mainstream formerly known as CIO News is a premier platform dedicated to delivering latest news, updates, and insights from the tech industry. With its strong foundation of intellectual property and thought leadership, the platform is well-positioned to stay ahead of the curve and lead conversations about how technology shapes our world. From its early days as CIO News to its rebranding as The Mainstream on November 28, 2024, it has been expanding its global reach, targeting key markets in the Middle East & Africa, ASEAN, the USA, and the UK. The Mainstream is a vision to put technology at the center of every conversation, inspiring professionals and organizations to embrace the future of tech.
