Rupee's Wild Ride: 2025 Volatility, 2026 Outlook Amid Trade Tensions

• Indian Rupee was Asia's weakest in 2025, depreciating nearly 5% against the US dollar, hitting a low of 91 in December.
• Key factors for 2025 decline included India-US trade uncertainties, rising imports, and significant FPI withdrawals.
• RBI intervened to support the currency and promoted INR use for cross-border trade with neighboring countries.
• Analysts project gradual stabilization in 2026, with some forecasting strengthening to ₹88 by year-end, contingent on trade deals.
• However, persistent trade uncertainties and erratic capital flows could push the rupee to ₹92 by March 2026, warn some experts.

Why It Matters: Rupee faced severe 2025 volatility due to external factors; 2026 recovery hinges on trade deals and capital flows.