Rupee's Resilient Comeback: SBI Forecasts Currency Recovery Amid Global Challenges

The Indian rupee is poised for a robust rebound after current market volatilities dissipate, according to a State Bank of India report. Despite the Dollar Index's upward trend, parallels with 2016-2017 suggest a strong rupee recovery once economic uncertainties stabilize, aided by strategic interventions from the Reserve Bank of India.

According to a recent report by the State Bank of India (SBI), the Indian rupee is expected to make a strong recovery once the current market uncertainties subside. SBI draws comparisons with the 2016-2017 period, which saw a significant rupee rebound after a volatile phase, despite a strong Dollar Index (DXY).

The report points out that while the Dollar Index may continue its upward trajectory, driven by factors such as global financial flows into the United States and pro-economic growth policies, emerging market currencies like the rupee face pressures. The potential for further US benchmark yield increases adds to the challenges, compounded by the impact of tariffs on inflation.

Domestically, India's currency in circulation has increased, and active interventions by the Reserve Bank of India (RBI) in the forex market have attempted to stabilize the rupee's depreciation. The report suggests that as global economic uncertainties wane, the rupee is likely to recover, providing optimism for its future value.

(With inputs from agencies.)