SBI Forecasts Stable Indian Rupee Amid Global Economic Shifts

The Indian rupee is projected to remain steady within the range of Rs 85-87 against the US dollar through 2025, as per a recent State Bank of India (SBI) report. The document attributes this stability to both global and domestic factors conducive to maintaining the balance of the USD/INR currency pair.

SBI anticipates that by 2025, tariffs affecting the US dollar will bolster the rupee. Moreover, a predicted decline in the DXY index, which measures the US dollar's strength against other major currencies, is expected to benefit emerging markets, including India, by alleviating currency pressures.

The report also analyzed the USD/INR Non-Deliverable Forward market projections for May 2026, which anticipate a rate around Rs 85.87 to Rs 86 per dollar over the next year. This reflects expectations of minimal currency pair volatility. Macroeconomic indicators from the US, such as a decrease in annual inflation and stable employment figures, further highlight potential economic shifts.

However, the report warns of the latent effects of tariffs on US inflation, suggesting that future inflation readings might be higher. The US Federal Reserve's dual focus on inflation and employment could lead to maintained interest rates to manage these developments.

SBI underscores that a pause in rate changes is expected based on recent Fed signals. Overall, a supportive economic landscape influenced by easing US inflation and steady policies positions the Indian rupee favorably for the coming year.

(With inputs from agencies.)