 "Will Indian Rupee's value appreciate to 84 against the US Dollar? Here's what top international banks say")
Bank of America (BofA) Research has revised its forecast for the Indian rupee, projecting the currency to strengthen to 84 per US dollar by December 2025, from a previous estimate of 87. The call reflects a broader shift in sentiment among analysts, who are increasingly bullish on the rupee amid improved capital inflows and a more favorable trade outlook.
BofA said in a note Thursday (May 22) that it expects the rupee to benefit from a weakening dollar and India’s stable domestic fundamentals. “The Reserve Bank of India’s (RBI) pro-growth stance is likely to attract renewed equity inflows,” the bank said.
The RBI has cut interest rates twice this year— first in February, then in April— to support economic growth. Traders are pricing in another 25-basis-point cut at the central bank’s upcoming June meeting. The policy easing, coupled with signs of an economic rebound, could help rekindle foreign investor interest in Indian equities. After pulling out $13.5 billion in the first quarter, foreign investors have returned with $2.5 billion in inflows so far this quarter.
BofA also noted that lower oil prices are helping to improve India’s terms of trade, which should keep the current account deficit in check. While the US had flagged India as a potential target for higher reciprocal tariffs earlier this year, BofA said that “ongoing efforts to secure a trade agreement have helped ease those concerns to an extent.”
“These factors are likely to support INR strength through the remainder of the year,” the bank said.
BofA’s revised outlook is in line with similar upgrades by other institutions. MUFG Bank, which had previously forecast the rupee at 87.5 to the dollar, revised its target to 84 about three weeks ago. Around the same time, ANZ raised its December projection to 86 from 88.5.
Impact Shorts
More Shorts“We see a mild appreciation bias for the rupee driven by dollar softness, an improving domestic growth outlook, the return of capital flows, and lower commodity prices,” said Sakshi Gupta, principal economist at HDFC Bank.
With inputs from agencies
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