The Indian rupee reached a fresh all-time low against the U.S. dollar in September 2025 amid several headwinds such as additional US trade tariffs - which would make Indian goods less competitive compared to other countries - and FIIs outflow, that raises demand for the US currency and drags the Indian rupee lower.
The INR/USD pair saw fluctuations as traders reacted to US President Donald Trump's decision to impose an additional 50% tariff on Indian imports. According to experts, this may cause an increase of the country's fiscal deficit, and its GDP growth to slow by 60–80 basis points.
The Reserve Bank of India has reduced its interventions in the foreign exchange market, allowing the rupee to face more volatility. With outflows from local equities expected, analysts predict the rupee may drop further, potentially reaching 90.00 per dollar by December 2025.
USD to INR Forecast 2025 – Summary
- USD to INR Forecast Q4 2025: The Indian Rupee remains on the downside, analysts forecasting USD to INR to move between 88 and 90 before the end of the year.
- USD to INR Forecast 2026: Global financial institutions and experts forecast a gradual depreciation of the Indian Rupee through 2026. The market anticipates a cautious approach by the RBI in the near term, to assess the impact of previous cuts and inflation trends. USD/INR is forecasted to hover to around 90 levels, depending on geopolitical developments and RBI initiatives.
- USD to INR Forecast 2026-2030: Experts broadly agree that the INR will continue to gradually decline against the USD between 2026 and 2030, with the exchange rate clustering between 90.00 and 102.00 INR per USD, driven by global monetary policy and economic fundamentals.
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USD to INR Forecast – Fundamental Outlook
In September, the Indian rupee hit an all-time low against the US dollar, reaching the 88.45 per US dollar-mark. The Indian currency has been under tremendous pressure during the past few months, after further tariffs announced by US President Donald Trump on Indian imports (effective August 27, 2025) to “penalize” the country for its trade barriers and purchases of Russian oil.
Additionally, a consistent sell-off by foreign institutional investors (FIIs) since July 2025, determined by concerns like US trade tariffs and earnings growth slowdown, has also indirectly led to the Indian rupee decline, since the sale converts into US dollars lowering the value of the Indian rupee.
The Reserve Bank of India (RBI)'s wait-and-watch position is considered by some experts a measure meant to counter the effects of US tariffs by allowing the rupee to depreciate, making the Indian exports more competitive.
However, according to some analysts, "rupee's slide past the 88-mark largely reflects US tariff-driven sentiment rather than a deterioration in India’s underlying fundamentals, suggesting a potentially limited room for further depreciation".
What will Trump's tariffs mean for India?
Trump's tariffs on India, particularly the recently imposed 50% duty on a wide range of Indian imports, may have a considerable negative impact on India's economy and economic relations with the United States. These are among the highest the United States imposed on any country, primarily targeting key sectors such as textiles, gems, jewelry, clothes, footwear, furniture, industrial chemicals, and shrimp.
The main consequences of Trump's tariffs for India may include:
- India's GDP growth could be reduced by approximately 0.5% to 0.8% due to the tariffs.
- A drastic reduction in Indian exports to the US, that could fall from $86.5 billion to around $50 billion by 2026, may substantially negatively impact India's current account balance, adding continuous pleasure on the rupee.
- The loss of hundreds of thousands of jobs, especially in major sectors like textiles, gems, jewelry, and leather products.
- A further deterioration in trade relationship between India and the US.
- A slowdown in global growth due to lower US and China growth.
In essence, Trump's tariffs may cause significant economic headwinds for India, including decreased exports, job losses, and slower GDP growth, complicating Delhi's trade policies and geopolitical balancing act.
Can India survive a trade war?
India is facing a great challenge in surviving a trade war against the United States that just imposed 50% tariffs on Indian goods. This could cut India's GDP by up to 0.8% while compromising hundreds of thousands of jobs, mainly in textiles, gems & jewelry, leather, medicines, and autos industries. These tariffs may cause a significant drop in exports to the United States, one of India's main markets.
Despite the tariffs, India has implemented took measures to survive and even grow. The key actions include:
- Domestic resilience: India is concentrating on increasing local consumption to compensate export losses. The government has reformed the commodities and Services Tax (GST) system by lowering taxes on numerous commodities, so promoting domestic consumer expenditure, which accounts for a sizable portion of India's GDP (about 61%). This strategy decreases reliance on exports and absorbs economic shocks from trade disputes.
- Diversification: To minimize its reliance on a single trading partner, India is striving to diversify its trade beyond the United States and build ties with other countries, particularly China, Russia an EU. This includes increasing strategic autonomy to withstand external economic constraints.
- Economic reforms and human capital investment: India plans to improve domestic financial institutions, lower compliance barriers, invest in education and vocational training, and encourage international investment to support tariff-free sectors
- Political and diplomatic management: India avoids direct retaliatory tariffs, instead choosing for diplomatic engagement and splitting trade concerns to retain cooperation on other vital topics such as security and global challenges.
While some industries are suffering heavily, India is using its enormous and rising home market, as well as savvy geopolitical actions, to maintain economic growth. The ability to endure the trade war depends on India's continuous adaptability, diversification, and economic reforms, rather than a short-term confrontation or response.
Why are foreign institutional investors selling Indian equities?
The value of Foreign Institutional Investors (FIIs) outflow from Indian equities in 2025 is around $15.46 billion USD as of early March 2025. This is one of the sharpest sell-off in recent years and is inching closer to the record outflow of $17 billion in 2022. The outflows have been particularly aggressive since October 2024, reaching approximately $28 billion in net FII outflows during that period. Additionally, there have been heavy outflows in the third and fourth quarters of fiscal year 2025, with $11.9 billion withdrawn in Q3 and $12.1 billion in Q4 so far.
The FIIs' sell-off can be associated to several factors:
- Trump's tariffs: the cumulative 50% US tariff on Indian goods worsens the market picture, potentially reducing GDP growth by 60-80 basis points.
- Weak earnings: sluggish earnings growth in recent quarters served as a crucial catalyst, pushing foreign investors to sell off in the Indian equity market.
- Dollar’s strength: Since July, the dollar index has risen by more than 1%, putting extra pressure on emerging markets currencies, such as Indian rupee.
In conclusion, substantial and continuous FII outflows put downward pressure on the Indian rupee by boosting demand for the US dollar for repatriation while decreasing foreign capital inflows, resulting in currency depreciation and other economic consequences such as inflation and market instability.
Growth risks may pave the way for Q4 policy easing
The Reserve Bank of India drastically reduced its inflation outlook even though it kept rates unchanged. There may still be opportunities for more rate cuts, especially if monetary policy transmission improves, given the mix of weaker inflation and new growth threats. In the meanwhile, the rupee should benefit from a steady differential rate.
Looking ahead, although potential RBI interventions may cap the USD/INR around 89.0 in the short term, helping to stabilize currency markets amid external challenges, if India is unable to negotiate reduced tariff levels, there is still a chance of additional decline. India's current account balance might be structurally weakened by a protracted export downturn, which would put further pressure on the currency.
The Indian rupee is forecasted to trade within the 88.00 - 90.00 range by the end of 2025.
USD to INR Forecast – The Latest Calls for Central Banks
Central bank rates are reaching their peak globally, and we're already starting to see rate cuts in certain regions. Here's what investment banks expect from policymakers from US and India over the next few months.
When Will Interest Rates Go Down
Federal Reserve
Experts widely forecast the U.S. Federal Reserve (Fed) to cut interest rates at its next Federal Open Market Committee (FOMC) meeting on September 17, 2025. Most forecasts point to a 25-basis point cut from the current 4.25%–4.50% rate range. Furthermore, many economists and financial institutions, such as ING, anticipate that this will be the first of multiple rate cuts in 2025, with some predicting up to three cuts this year and more in 2026.
CME FedWatch, which measures the likelihood of Fed policy movements, now sets the odds of a quarter of one percentage point cut at 94.5 percent, suggesting that the Fed is in a "difficult" position due to a weakening labor market and increasing inflation.
However, according to experts, markets have largely priced Fed rate cuts for 2025, especially a 25-basis point cut expected at the upcoming Fed meeting on September 17, 2025.
Reserve Bank of India
The Reserve Bank of India’s (RBI) is projected to cut the interest rates again, possibly in the fourth quarter of 2025, with multiple sources expecting a 25-basis point rate cut around December 2025. After a 50-basis point cut in June 2025 and keeping rates steady at 5.50% in August 2025, the RBI looks to be indicating a pause, but it is likely to lower rates further if economic factors such as inflation and growth warrant it.
The RBI's next Monetary Policy Committee meeting is slated for September 29–October 1, 2025, but experts are mainly referring to a cautious strategy that should allow earlier rate cuts to take effect. This expectation is in line with the views of the RBI Governor and experts, who predict a short-term pause with room for further easing by year's end to spur credit expansion and sustain economic momentum.
USD to INR Forecast – Technical Outlook
The USD/INR pair continues to show a significant upward movement on the daily chart, with the price breaking to a fresh all-time high, above the 88.40 mark and holding above the key 100-day Exponential Moving Average (EMA). The 14-day Relative Strength Index (RSI) divergence might signal a potential pullback if the price fails to consolidate above the 88.50 key-resistance level.
On the other hand, a decisive bullish breakout above the 88.5 mark could pave the way higher to 89.00, and 90.00 price levels.
For illustrative purposes only. Past performance is not indicative of future results.
USD to INR Forecast – Institutional and AI-Algorithms Price Predictions 2025-2030
Below is the updated data of the USD to INR forecasts as of September 2025. It either can be altered or can be proved to be wrong as it is based on essential factors like interest rates and central bank monetary policy, in line with market assumptions. It is important to research and analyze keeping in mind that past displays do not assure future outcomes.
USD to INR Forecast by Reuters Poll
A Reuters poll predicts the Indian rupee will avoid a further dramatic slide after falling through 88 per U.S. dollar earlier in September. However, more than one third of the analysts expect the currency to drift toward 90 as long as hefty U.S. tariffs on Indian goods stay in force.
Trade and capital inflows are at danger of being slowed down by the harsh 50% U.S. tariffs, which are among the highest in the world.
USD to INR Forecast by CareEdge Ratings
CareEdge Rating didn’t update their USD/INR forecast and still expect the Indian rupee to weaken slowly against the U.S. dollar, reaching 88.52 by 2025. Rajani Sinha, CareEdge Ratings' chief economist thinks that given robust internal demand and less reliance on exports, the overall impact of US tariffs on India's economy is likely to be minimal. However, she claims that there would be indirect effects due to currency pressures, capital outflows, and a decline in investor sentiment.
USD to INR forecast by Capital Economics
Capital Economics expects the Indian rupee to weaken further against the U.S. dollar, with the USD/INR reaching 90.10 through late 2025, reflecting sustained capital outflows, a widening current account gap and limited Reserve Bank of India (RBI) intervention.
USD to INR forecast by Bank of Baroda
Bank of Baroda predicts the Indian rupee will continue to gradually weaken against the U.S. dollar, with the USD/INR estimated at 89.05 by late-2025. This forecast considers US tariffs’ impact on India’s economic growth, inflation, and global financial conditions. The FPI outflows that hit $4.0 billion are expected to put pressure on the rupee. If these trends persist, businesses and investors may face higher costs when exchanging rupees for dollars. This could add pressure on India's external sector and affect those relying on imports or international transactions.
USD to INR Forecast by Wallet Investor
Wallet Investor forecasts USD to INR to close bullish in 2025.
The 2025 USD to INR forecast shows a potential maximum rate of 89.138 and a closing rate of 89.066. For 2026, the rate is expected to continue weakening with USD/INR projected to trend higher, potentially reaching about 90.00. The USD to INR forecast for the next 5 years is bullish, with the AI algorithm predicting a new all-time high of 101.537.
USD to INR Forecast by AI Pickup
The Artificial Intelligence (AI) Pickup algorithm supports the statement that the strength of the prevailing trend and the live inflationary climate will continue to weaken the rupee in a long-term forecast until 2027. The AI algorithms USD to INR forecast points towards an advance up to 90.79 in 2026, and 95.22 in 2029.
Summary of USD to INR Forecast
- With the US tariffs in place, and a wait-and-see stance from the Reserve Bank of India, USD/INR is projected to trend higher by the end of 2025. RBI may cut rates again in Q4, if economic conditions such as inflation and growth warrant it.
- The rupee is expected to remain under pressure amid global uncertainties. USDINR could reach 90.0 by FY26, compared to 88.5 in FY25. The near-term trajectory of INR will depend on US tariffs impact on India’s economic growth, the FIIs outflows, RBI’s intervention strategy and geopolitical developments. If external pressures ease and capital inflow strengthen, INR depreciation could slow. Otherwise, continued FX outflows and policy uncertainty could push USDINR toward the higher end of projections.
*It is worth keeping in mind that both analysts and online forecasting sites can and do get their predictions wrong. The USD to INR price predictions based on AI are generated using algorithmic and AI-based models that rely on historical data and assumptions. Keep in mind that past performance and forecasts are not reliable indicators of future returns.
When considering USD/INR forecasts and price predictions for 2025 and beyond, it’s important to keep in mind that high market volatility and the macroeconomic environment make it difficult to produce accurate long-term USD/INR analyses and estimates. As such, analysts and forecasters can get their USD to INR forecast wrong.
It is essential to do your research and always remember your decision to trade depends on your attitude to risk, your expertise in the market, the spread of your investment portfolio, and how comfortable you feel about losing money. You should never invest money that you cannot afford to lose.
Sources:
- https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx
- https://www.federalreserve.gov/
- https://www.deloitte.com/us/en/insights/topics/economy/asia-pacific/india-economic-outlook.html
- https://www.goldmansachs.com/insights/goldman-sachs-research
- https://www.morganstanley.com/im/publication/insights/articles/article_theindiaopportunity_ltr.pdf
