Rupee may slip to 92 before stabilising, believes Motilal Oswal’s Navneet Damani

The Indian rupee slipped past the key psychological 91-per-dollar level on December 16, touching a fresh all-time low against the US dollar, as market sentiment remained fragile amid trade-related uncertainty and capital outflows.

According to Navneet Damani, Head of Commodity and Currency Research at Motilal Oswal Financial Services, the pressure on the rupee could persist in the near term. He said the currency may weaken further toward 91.50 or even 92 before stabilising, unless supportive policy or macro developments emerge.

Damani attributed the sharp depreciation partly to a technical breakdown, noting that a long-standing support level around 89 was breached recently. “Once that level gave way, it triggered panic selling in the market, leading to recurring bouts of depreciation,” he said.

He added that exporters have stepped up dollar selling and hedging activity, anticipating that therupee could find resistance in the 91–92 range.

On the macro front, Damani identified uncertainty around a major trade agreement as a key factor weighing on the currency. He said a sustained recovery is unlikely without either positive signals from the government or significant intervention by the Reserve Bank of India (RBI).

Notably, Damani said the rupee’s weakness has not been driven by broad dollar strength. He pointed out that the rupee has diverged from movements in the dollar index since early 2025, with the depreciation in the local currency accelerating more recently.

He also cited foreign capital outflows from equity markets and rising global bond yields as additional pressures. “Japanese bond yields have been rising, US yields are above 4%, and the narrowing yield differential is currently working against the rupee,” he said.

The RBI’s role has come under closer scrutiny amid the currency’s slide. Damani noted that while the central bank appeared active in defending the rupee in the 88–89 range, its presence has been less visible since then. This view, he said, is supported by forex reserve data, which have not shown a sharp decline in recent weeks.

He added that the rupee’s depreciation could pause near the 92 level, where market participants may expect a stronger response from the central bank.

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