Rupee Set for a Rebound: Navigating Tariffs and Geopolitical Challenges

The Indian rupee has depreciated by 5.7% against the USD due to US-imposed tariffs. While geopolitical uncertainties and capital outflows pressure the currency, a SBI report suggests a potential rebound in the next fiscal year. Forex reserves have dipped due to RBI interventions.

The Indian rupee, impacted by a 50% tariff from the US, is showing potential for a strong rebound in the latter half of the next fiscal year, as per an SBI research report released on Wednesday.

Following the US's tariff hikes on April 2, 2025, the Indian rupee depreciated by 5.7% against the dollar, marking the steepest decline among major economies. Despite occasional appreciation tied to optimism around a US-India trade deal, the rupee remains under pressure due to current geopolitical uncertainties.

Geopolitical risks have led to a significant drop in portfolio inflows, averaging USD 87.7 billion from CY15-CY25, compared to USD 162.8 billion during CY07-CY14. Despite a modest recovery on Wednesday, India's forex reserves fell to USD 687.2 billion by December 5, 2025, mainly due to RBI's interventions.

(With inputs from agencies.)