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The Indian rupee could weaken to 100 against the US dollar by June 2027, despite its recent stability, according to an Axis Bank Research report released on Wednesday. The report said a slowdown in global artificial intelligence (AI) investments and a reversal in foreign portfolio investor (FPI) outflows could redirect global capital towards India.
Such a shift in capital flows could bring India’s financeable current account deficit (CAD) back to 0.8 per cent of GDP, the report said.
However, India’s foreign exchange reserves remain inadequate under traditional measures and the International Monetary Fund’s Assessing Reserve Adequacy (ARA) metric. This highlights the need to rebuild the country’s external financial buffers.
The report warned that sizeable external liabilities could put further pressure on the rupee. It noted that the Reserve Bank of India (RBI) holds significant short foreign exchange positions, with around $200 billion maturing in more than one year. Of this amount, approximately $150 billion falls within the three-to-five-year maturity period.
Rising government debt amid geopolitical conflicts and declining global savings could further restrict capital flows into Indian assets.
The report added that the rupee had weakened even when India’s current account deficit remained low. Therefore, falling crude oil prices alone may not significantly improve the currency’s outlook.
Meanwhile, another report projected India’s GDP growth at around 7.8 per cent in Q2 FY27. Strong domestic demand, corporate performance and credit growth are expected to support economic expansion despite global uncertainties.
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