Rupee Faces Short-Term Pressure But Medium-Term Outlook Positive: Abhishek Goenka
Market expert Abhishek Goenka sees the Indian rupee facing short-term pressure toward 92 per dollar due to multiple headwinds including weak export visibility, widening current account deficit, and foreign portfolio outflows of $19 billion last year and $2.7 billion this year. However, he expects meaningful improvement from FY27 with the currency averaging below 90 per dollar, citing 5% current undervaluation. The RBI has sold around $45 billion since October while maintaining balanced intervention strategy focused on growth and liquidity priorities.
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The Indian rupee's sharp decline toward the 92-per-dollar mark has sparked concerns about mounting pressures on the currency, but market expert Abhishek Goenka believes the medium-term outlook remains constructive. Speaking to ET Now, the Founder of IFA Global and Billionz outlined the key factors driving current weakness while expressing optimism about the currency's longer-term trajectory.
Current Pressures Weighing on Rupee
Goenka identified several headwinds currently working against the rupee, making short-term movements difficult to predict. The currency faces multiple challenges that have contributed to its recent weakness.
| Pressure Factor | Impact |
|---|---|
| Interbank Dollar Sales | Lack of dollar sales in the market |
| Export Sector | Weak order visibility and margin pressure |
| Current Account | Gradual widening of deficit (CAD) |
| Capital Flows | Inflows failing to fully fund CAD |
The currency has remained vulnerable despite significant foreign portfolio outflows. Recent market volatility, including selling triggered by news related to Adani Group, led to a sharp intraday fall of 30-40 paise, highlighting the rupee's sensitivity to external factors.
Foreign Investment Outflows Continue
Foreign portfolio investment data reveals the scale of capital flight affecting the rupee. The currency has faced sustained pressure from overseas investor withdrawals across multiple periods.
| Period | Outflow Amount |
|---|---|
| Last Year | Nearly $19 billion |
| Current Year (YTD) | About $2.7 billion |
Medium-Term Recovery Expected
Despite acknowledging near-term challenges, Goenka expressed confidence in the rupee's medium-term prospects. He expects meaningful improvement in the currency's performance as conditions normalize and external pressures ease.
"From FY27, we expect the rupee to improve meaningfully, with the average likely to be below 90 per dollar," Goenka stated. He noted that on a relative valuation basis, the rupee appears around 5% undervalued currently. Including forward premiums, one-year forward levels are closer to 94.5-95, suggesting room for appreciation once market conditions stabilize.
RBI's Balanced Intervention Strategy
The Reserve Bank of India has adopted a measured approach to currency management, balancing multiple economic priorities. Goenka explained that the central bank appears to be managing the "impossible trinity" by preserving domestic liquidity and supporting growth, even if it means allowing moderate rupee weakness.
| RBI Action | Details |
|---|---|
| Dollar Sales Since October | Around $45 billion |
| Intervention Strategy | Selective deployment during thin liquidity |
| Policy Balance | Growth, liquidity, and currency stability |
The central bank's cautious approach reflects broader considerations about reserve deployment, especially after diversifying part of its holdings into gold. "With the global environment unsettled, the central bank will use reserves selectively—intervening when liquidity is thin and the impact is maximised," Goenka observed.
Export Sector Finds Some Relief
While exporters continue facing demand and margin pressures, currency depreciation provides partial relief to the sector. Export-oriented companies have absorbed margin pressure to protect volumes and credit lines, with currency weakness offering some cushioning effect.
Goenka noted that a weaker rupee supports exporters and improves nominal GDP growth, which policymakers are currently prioritizing. Combined with duty drawbacks and controlled domestic inflation, the depreciation helps offset some competitive disadvantages faced by Indian exporters.
Strategic Outlook and Recommendations
Goenka advised market participants to focus on medium-term fundamentals rather than short-term volatility. He emphasized that while near-term movements may remain unpredictable, the underlying trajectory should improve as external pressures diminish and capital flows stabilize. Progress on trade deals could potentially trigger a sharp rebound in the currency, providing additional upside potential for the rupee's recovery.
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