Rupee Rebound In 2026? INR To Move In 87.00–92.00 Range, Recovery Eyed In 2H2026: Analysts

The rupee will likely retreat from a record low against the US dollar in the latter half of the calendar year 2026 post near-term volatility. The Indian currency is expected to move in a broad range of 87.00–92.00 in the next calendar year, according to forex traders. Clarity on the US and India trade deal and broad weakness in the dollar index will drive the recovery.

The prolonged delay in finalising a trade deal with the US has contributed to the rupee's 5.39% decline this year, its sharpest annual fall since 2022.

The rupee is now Asia’s weakest performer as steep US tariffs of up to 50% on Indian goods hurt exports to its largest market and dampen foreign investors' appetite for Indian equities, said Jigar Trivedi, a senior research analyst at Reliance Securities.

In calendar year 2025, foreign portfolio investors remained net sellers in both the debt and capital markets, which exerted pressure on the Indian unit. FPIs have pulled out Rs 70,976 crore from domestic financial markets so far in 2025, according to National Securities Depository Ltd. data.

Adding to the rupee's troubles, the Reserve Bank of India — after consistently supporting the rupee in the previous year — has eased intervention after a regime change.

"The RBI is comfortable to let the rupee slide a bit more, around 91, because India has very low inflation. There is no harm in supporting exporters. RBI may cap the volatility in a very short span," said Anindya Banerjee, head, commodity and currency, Kotak Securities in an interview to NDTV Profit.

The RBI is unlikely to protect the rupee aggressively against the greenback in 2026, as it will prioritise more freedom on the monetary policy front amid low inflation and to maintain trade competitiveness.

The Central bank has limited ability to safeguard the rupee because of its short-dollar position in the forwards market. It is important for that position to be cleared up before the RBI gets the rupee completely in its control again, said Abhishek Goenka, founder of IFA Global and Billionz. He has given a range of 87.00–91.00 for the Indian unit in 2026.

The dollar index, which gauges the strength of the greenback against six major currencies, will likely have broad bearish structure in 2026, according to Abhilash Koikkara, executive vice president, head, forex and commodities at Nuvama Institutional Equities. Koikkara expects the dollar index may decline eventually toward the 92–93 level in the later part of 2026.

Koikkara sees the Indian currency trading in a broad range of 87.50–92.00 a dollar in 2026. A new governor will take over the US Federal Reserve in 2026, which will be a crucial event.

Traders expect that US President Donald Trump nominating his pick as Fed Chair will be negative for the dollar index as the new chair is likely be dovish and would influence the Federal Open Market Committee to carry out faster rate cuts, according to Goenka.

He said the US Fed will also likely start buying US treasuries and mortgage-backed securities again at the beginning of the quantitative easing. This is again negative for the dollar. The broader de-dollarisation theme is likely to continue as central banks look to diversify their reserves in 2026.