The rupee has depreciated by approximately 1.77 percent in the past month alone. However, the Reserve Bank of India has been continuously intervening in the market to try to ease pressure on the rupee.

How much further will the Indian rupee fall?

Dollar vs Rupee: While crude oil prices are experiencing a surge amid the war-like situation with Iran, the Indian rupee plummeted to an all-time low of 92.62 per dollar on March 18th. According to Goldman Sachs, the Indian rupee is the weakest among South Asian nations and could fall to 95 against the US dollar by next year. If this happens, it could be a major setback for the Indian economy.

The rupee has depreciated by approximately 1.77 percent in the past month alone. However, the Reserve Bank of India has been continuously intervening in the market to try to reduce pressure on the rupee. In response to market conditions, the RBI sold approximately $18 to $20 billion in a single week.

Why is the rupee falling?

Foreign investors withdrew approximately $5.5 billion in equities from the Indian market in March, causing the Nifty 50 to fall by nearly 8 percent. On March 17, the rupee hit a low of 92.41 against the dollar, a decline of approximately 6.75 percent over the previous 12 months, before closing at an all-time low of 92.46.

According to Shantanu Sengupta, an Indian economist at Goldman Sachs, the rupee's fall to 95 per dollar is projected based on fears of a possible closure of the Strait of Hormuz due to the US-Israel conflict and a widening of the current account deficit.

Decline in growth rate

Goldman Sachs also believes this could impact India's economic growth rate. The organization has revised its previous forecast, reducing its GDP growth rate for fiscal year 2026-27 from 7.0 percent to 6.5 percent. Additionally, inflation is projected to rise by 30 basis points, while the current account deficit (CAD) could widen by 0.8 percentage points to 1.2 percent of GDP.