The Indian rupee is expected to experience pressure in the coming years, with projections indicating that it could weaken to 92 against the US dollar by March 2026. This forecast is primarily driven by trade policy uncertainty and ongoing capital outflows.
Key Factors Affecting the Indian Rupee
- Trade Policy Uncertainty: Ambiguities and changes in trade regulations can impact investor confidence and foreign exchange rates.
- Capital Outflows: Movement of capital out of the country can reduce demand for the rupee, causing it to depreciate against the dollar.
Implications
A weakening rupee to 92 against the dollar may lead to:
- Increased cost of imports and inflationary pressures.
- Challenges for businesses that rely on foreign currency.
- Potential impact on India’s trade balance and economic growth.
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