Rupee to hit 97/USD by H1FY27 if West Asia crisis persists: Report

• Yes Bank report warns Indian rupee could weaken to 97.00-97.50 against US dollar in H1FY27 if West Asia crisis continues.
• RBI may need to accept higher depreciation pressures, with outlook changing if war ends and oil prices stabilize at USD 65-75/bbl.
• West Asia crisis disrupts India's 'goldilocks' phase, leading to higher oil prices, increased production costs, and rising retail inflation.
• Currency depreciation could further fuel inflation; a 5% INR depreciation may cause a 30-35 bps increase in headline CPI.
• Economic growth may slow due to lower domestic consumption and global slowdown impacting exports, while CAD is projected to widen to 1.6-2.0% of GDP.