The Indian rupee is expected to drop to a new low, hitting around 85 rupees for every U.S. dollar in the next six months. This prediction comes from a recent survey of foreign exchange experts. The Reserve Bank of India (RBI) has been trying to help the rupee by using its large savings, but even with those efforts, the currency reached a record low of 84.74 rupees on Tuesday.
India’s economy, which is growing faster than any other major country right now, saw a surprising slowdown, growing only 5.4% in the last quarter. This news has led some people to think the RBI might lower interest rates soon. However, only a small number of economists believe a rate cut will happen this month; most think it will happen in the first part of 2025.
Meanwhile, U.S. President-elect Donald Trump’s proposed tariffs have made the U.S. dollar stronger, rising almost 6% since October. The RBI has used around $50 billion from its reserves to support the rupee, but foreign investors have pulled out over $13 billion from India during this time.
Forecasts from the survey suggest the rupee will weaken further, trading at about 84.85 per dollar in three months and around 85.12 in six months. The rupee is also considered expensive compared to other Asian currencies, so it needs to drop more. Some experts believe that the government can still support the economy through increased spending, interest rate cuts, and keeping the rupee low.