Indian Rupee Set to Stabilize Amid Global Challenges

Union Bank of India suggests the Indian rupee may not depreciate further in the near term despite global pressures. The currency has weakened by 4% this year but is supported by easing inflation and GST reforms. Future trade agreements could further stabilize the rupee against the US dollar.

The Indian rupee, having weakened by approximately 4% this year, is anticipated to remain stable, according to a Union Bank of India report. The report suggests that further depreciation is unlikely in the near future.

Despite trading in a tight range against the US dollar due to global pressures and domestic dynamics, including US tariffs and significant capital outflows, the rupee hit a record low near 89.4950. Factors like a widening current account deficit and delayed US trade agreements have weighed down the currency.

However, easing inflation and GST reforms are stabilizing influences. According to Union Bank, once the India-US trade deal finalizes, it could significantly shift the appreciation threshold for the rupee. The bank forecasts the rupee to trade between Rs 88.80 and Rs 89.50 through December, with potential strengthening if positive trade and equity developments occur.

(With inputs from agencies.)