Geopolitics, RBI Seen Anchoring Dollar/Rupee at 90–91 by March-End: Poll

The rupee is expected to move in a narrow range into the financial year-end despite the usual January–March improvement in India’s balance of payments, a poll of economists and forex brokerages showed. The dollar/rupee pair is seen anchored around 90–91 by March-end, with fragile capital flows and likely Reserve Bank of India intervention limiting gains.

The median forecast in the poll points to the rupee ending March near 90.40, with estimates ranging between 89.50 and 91.50. While foreign portfolio investment flows turned marginally positive in February following the US–India trade agreement, economists cautioned that the broader capital flow picture remains fragile. Net foreign direct investment inflows have remained negative for four consecutive months, tempering optimism around sustained appreciation. 

“Inflows haven’t turned up meaningfully to impart a sustained appreciation bias for the rupee,” said Dhiraj Nim, Economist and FX Strategist at ANZ, who sees dollar/rupee at 91.50 by March-end.

He added that even if the spot rupee dips modestly, the broader trajectory remains constrained. Nim described the rupee’s recent rebound as driven by “a bit of both” fundamentals and sentiment. While strong growth, low inflation and a manageable current account deficit should prevent sharp weakness, global push factors are outweighing domestic pull factors in driving capital flows, he said.

On the RBI’s forex strategy, Nim expects the central bank to step in if the dollar/rupee falls below 90. “There is a need to recoup spent FX reserves,” he said, highlighting sizeable near-term forward maturities. Higher crude prices rank as his primary upside risk to the dollar/rupee pair.

Over April-December, the central bank was a net seller of more than $50 billion in the spot market to limit volatility, underscoring the scale of intervention deployed to smooth disorderly moves. The RBI’s net short forward book stood at $62.3 billion as of December, a structural factor that could cap rupee gains if appreciation pressures intensify.

Sakshi Gupta, Principal Economist at HDFC Bank, expects the dollar/rupee to be in the 89.50–91.00 range by March-end, as elevated geopolitical tensions and AI-related sell-offs in the equity market could prevent sharper appreciation. Gupta characterised the recent stability as sentiment-driven and stressed that without a turnaround in both equity and debt FPI flows, the rupee could remain vulnerable to intermittent depreciation pressures. She flagged disappointment over trade implementation as the key risk.

Upasna Bhardwaj, Chief Economist at Kotak Mahindra Bank, forecasts a slightly stronger 89.75–90.00 range, supported by year-end exporter hedging and a marginal pickup in FPI inflows.

However, she too expects the RBI to act aggressively if inflows accelerate, likely through spot purchases and sell-buy swaps to offset the sizeable short forward book.

Sameer Narang, Head of Economics Research at ICICI Bank, flagged AI-related risks to IT services exports as a potential drag on inflows, though he expects the merchandise trade deficit to improve after the US trade deal.

“This year is again going to be a year dominated by geopolitics, and a very solid reason is needed for the rupee to appreciate beyond 90.50,” said Madhavankutty G, Chief Economist at Canara Bank.  He added that strong technical support has formed around the 90.50 level for the dollar/rupee.

With exporter flows picking up and the RBI rebuilding reserves after heavy intervention, economists expect gains to remain capped. Geopolitical tensions, uncertainty following the US Supreme Court ruling on tariffs, and the central bank’s active presence in the forex market are likely to keep the currency range-bound, even as seasonal flows provide near-term support.