Will the rupee finally stabilise? CareEdge forecasts 89–90 per dollar by FY27-end

The Indian rupee could hold steady around the 89–90 per US dollar level by the end of FY27, supported by a softer dollar and a manageable current account deficit, according to a new report by CareEdge Ratings. The agency says improving global sentiment, easing trade worries and stable foreign inflows may help the currency avoid sharp swings over the next couple of years. CareEdge noted that the rupee has already shown some recovery after weakening close to 92 per dollar in recent weeks. It has strengthened back to around 90.6, helped by improving market mood following India’s trade deal with the United States and the Free Trade Agreement with the European Union.

The ratings firm maintained its forecast that the rupee will remain in the 89–90 range by FY27-end, even though it is still slightly weaker than it was a month ago.

Trade deals are helping sentiment improve

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The report suggests that easing uncertainty on the trade front could bring foreign investors back into the Indian markets. When investment inflows rise, they usually provide natural support to the rupee by improving dollar availability and reducing pressure in currency markets.

CareEdge believes this could make the rupee’s movement more stable going forward, compared to the sharper volatility seen earlier.

RBI may not need to step in as often

One of the more reassuring takeaways from the CareEdge report is that the Reserve Bank of India could get some breathing space in the months ahead.

If foreign money starts flowing back into Indian markets and the rupee stops swinging sharply day to day, the central bank may not need to jump in as often to steady things.

In recent months, the central bank has been keeping a close watch on the currency, stepping in whenever the rupee looked under sudden pressure or moved too quickly. The idea is simple: avoid wild fluctuations that can make life difficult for businesses dealing in imports, exports or overseas payments.

A softer US dollar could work in India’s favour

CareEdge also pointed to the weakening dollar index as an important factor. Expectations of interest rate cuts by the US Federal Reserve have increased after inflation in the US slowed sharply in January to 2.4 per cent.

A softer dollar tends to benefit emerging market currencies like the rupee, as it reduces depreciation pressure and often encourages investors to move money into markets such as India.

Current account deficit remains manageable

The agency said India’s current account deficit is expected to remain under control, which is another reason the rupee may stay relatively stable. A manageable CAD lowers the risk of external shocks and helps keep the currency anchored during uncertain global conditions.

What this means over the next two years?

While the rupee may still see short-term ups and downs depending on oil prices, global risks and US policy moves, CareEdge’s overall view is that the broader environment looks supportive.