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Informist, Monday, Apr. 6, 2026

 

By Pratiksha

 

MUMBAI – After logging its worst monthly fall in six years in March, the rupee is expected to take a breather and rise against the dollar this month, primarily because of the recent tightening of foreign-exchange norms by the Reserve Bank of India. However, a prolonged war in West Asia may limit gains for the Indian unit, market participants said.

 

The Indian unit may settle at 93.25 a dollar by the end of this month, sharply higher from 94.83 at the end of March, according to the median of estimates of 12 respondents from banks and brokerages polled by Informist.

 

"RBI's measures such as improving forex liquidity, encouraging hedging, and managing volatility through interventions—provide short-term stability rather than long-term appreciation," Jateen Trivedi, VP research analyst - commodity and currency at LKP Securities, said.

 

"Structurally, these steps help in reducing excessive volatility and panic moves, but they cannot offset fundamental pressures like a high import bill or global dollar strength. Thus, RBI can smoothen the trajectory, but not reverse the trend unless macro factors improves."

 

In the last two weeks, the central bank has tightened its control on the currency market by issuing directions to support the Indian unit and curb speculative trading. The RBI has mandated that all authorised dealers trim their onshore net open positions to $100 million by Apr. 10. Market participants expect traders to continue unwinding arbitrage trades between the NDF and onshore markets, providing support to the rupee.

 

The RBI has also prohibited banks from offering non-deliverable derivative contracts using the rupee to resident or non-resident clients, effective immediately. The central bank also said that companies cannot rebook cancelled forward contracts. Ever since the announcement of the curbs, the rupee has recovered over 2% from its record low of 95.2200, hit on Mar. 30. On Thursday, the Indian currency posted its biggest single day gain in almost 13 years.

 

The RBI's heavy crackdown on speculative activity in the currency market came as the rupee witnessed intensified downward pressure and declined 4.2% against the dollar in March. This was owing to a jump in crude oil prices and strong foreign portfolio outflows from domestic markets after Israel and the US launched joint military strikes on Iran at the end of February.

 

Since the onset of war, Brent crude oil prices have jumped up almost 50% while FPIs have pulled out around $15.42 billion worth of funds from the domestic markets, on a net basis. The war in West Asia has shown no signs of de-escalation and if it prolongs, market participants expect the rupee to remain under great pressure.

 

Of the 12 poll respondents, four expect the rupee to fall below the 94.00 level this month, with one expecting it to test the psychologically-crucial 96 per dollar level. By the end of June, the Indian unit may settle at 94.58 a dollar, according to the median of estimates of eight respondents from banks and brokerages polled by Informist.

 

"The structural support for rupee can only come through favourable macros not by technical changes. If importers are not confident, they will continue to buy the dips (in dollar-rupee)," Ritesh Bhansali, deputy chief executive officer at Mecklai Financial Services Ltd, said.

 

As long as Brent crude oil prices trade above $100 per barrel, the Indian currency will continue to feel the heat, market participants said. Moreover, if the upward trajectory of prices continues, India will be staring at a much higher current account deficit, a sharp rise in inflation, and lower GDP growth.

 

Owing to weak risk appetite among investors due to the war in West Asia, market participants expect sustained FPI outflows from the Indian markets to weigh on the rupee. US President Donald Trump Sunday intensified pressure on Iran, threatening in a social media post, to target Iran's power plants and bridges ‌on Tuesday if the strategic Strait of Hormuz is not reopened.

 

Following the recent measures by the central bank to support the rupee, some market participants expect more regulatory steps on the same by the RBI at its Monetary Policy Committee decision on Wednesday. In the past, the central bank has used dedicated dollar-buying windows for oil companies and facilities to mobilise foreign currency deposits from non-resident Indians when the rupee came under sustained pressure.

 

Whatever the case, the RBI's steps may only prove effective in the long term if the fundamentals are in the rupee's favour.

 

POLL DETAILS

 

Participant	Apr-end	Jun-end
ANZ Bank India	93.50	93.50
CSB Bank	92.50	-
Globe Capital Market	91.00-94.00	89.00-95.50
HDFC Bank	94.00-95.00	94.00-96.00
HDFC Securities	92.30-93.50	92.50-93.80
ICBC India	94.50-95.00	-
IDFC FIRST Bank	94.00-94.50	94.50-95.00
Large state-owned oil company	92.30	-
LKP Securities	96.00	98.00
Mecklai Financial Services	92.00-94.00	95.00
Nuvama Wealth Management	93.60	94.40
Tamilnad Mercantile Bank	92.00-03.00	-
Median	93.25	94.58

 

End

 

US$1 = INR 93.06

 

Edited by Ashish Shirke

 

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