NEW DELHI (Realist English). The Indian rupee has become Asia’s worst-performing currency this year, weighed down by stalled negotiations on a US–India trade agreement and persistent foreign investor outflows, according to analysts.
Forecasts by Nomura and S&P Global Market Intelligence suggest the rupee could weaken to 92 per dollar by the end of March, from around 89.6 currently. Any sustained recovery, economists say, would largely depend on progress toward a long-awaited trade deal with the United States.
“We see the rupee as undervalued at current levels, but a correction will require greater clarity on the US–India trade agreement,” said Hanna Luchnikava-Schorsch, head of Asia-Pacific economics at S&P Global Market Intelligence, which expects a deal within the next six months.
India is currently among the most heavily tariffed economies globally, facing duties of up to 50%—higher than those imposed on China—as talks with Washington drag on. After the tariffs took effect in August, Indian exports to the US fell sharply in September and October before rebounding in November.
Economists warn that prolonged uncertainty risks undermining India’s position as an alternative manufacturing and supply-chain hub for companies serving the US market. “Sustained high tariffs and policy ambiguity have triggered foreign portfolio outflows, while a weaker rupee raises import costs and inflation risks,” said Sonal Varma, Nomura’s chief economist for India and Asia ex-Japan.
The currency breached the psychologically significant 90-per-dollar level earlier this month, having started the year at 85.64, and slid past 91 within weeks. Foreign investors have remained net sellers of Indian assets, pulling more than $10bn across asset classes so far this year, with nearly $18bn exiting equities alone.
India’s central bank has reiterated its preference for allowing market forces to determine the exchange rate, though it was reported to have intervened recently to slow the rupee’s decline.
While a weaker currency could boost export competitiveness, analysts caution that without a trade breakthrough and a reversal of capital outflows, pressure on the rupee is likely to persist into early 2026.
