Rupee could slide to 97.5 unless oil prices ease, says Kotak Securities’ Anindya Banerjee

Anindya Banerjee, Head of Research-Currency, Commodity and Interest Rate Derivatives, Kotak Securities, said the Indian rupee is facing sustained pressure due to rising crude prices and continued foreign portfolio investors (FPI) outflows.

If crude prices remain elevated or rise further, “We could see even 97 or 97.5 on the currency,” he said.

He explained that the surge in crude prices has sharply increased India’s import costs. Before the recent geopolitical tensions, India’s crude basket was around $70 per barrel, with a monthly import bill of $10–11 billion. Now, with prices near $130 per barrel, the import bill has risen significantly. “That’s a jump of 80 to 85%,” he noted, adding that this creates an additional $7–8 billion in dollar demand each month.

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However, he expects the currency to recover if oil prices ease. In a scenario where crude falls back to around $80 per barrel, “We could see the rupee actually appreciate towards 93 or 92 levels,” he added, adding that valuation metrics suggest the currency is currently undervalued.

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