Rupee Weakness Cyclical, Not Structural; FY27 Recovery Expected: S Mahendra Dev

• S Mahendra Dev, Chairman, Prime Minister’s Economic Advisory Council, states rupee depreciation is cyclical, not structural.
• He anticipates the rupee's weakening against the US dollar will be arrested by FY27 due to higher FPI and FDI inflows.
• The rupee weakened over 5% in 2025, closing at Rs 91.79/$ on Wednesday, impacting import costs.
• Uncertainty regarding the US-India trade deal and FII outflows due to AI stock investments in the US are contributing factors.
• Increased FDI in India's technology sector and investments in data centers are expected to drive rupee appreciation.

Why It Matters: Rupee's current weakness is temporary; a strong recovery is projected by FY27 driven by increased foreign investments.