Rupee Likely to Stabilize After Temporary Dollar Surge: Emkay Wealth Management
Emkay Wealth Management Ltd, the wealth management arm of Emkay Global Financial Services in its latest press navigator report cited that the recent uptick in the US Dollar appears to be a short-term phenomenon, driven by global uncertainties around tariffs and unclear cues on US interest rates. Despite the Dollar gaining about 1% over the past month, it has depreciated 4.8% against major currencies over the last year. Benchmark yields, including the US 10-year, have dipped below 4%, indicating that markets have already priced in potential rate cuts.
In India, the Rupee touched a high of Rs.88.80 against the US Dollar in early October 2025, before easing to Rs.87.70 by the third week. The currency’s weakness since late 2024 has been largely attributed to the widening trade deficit and persistent FII outflows from domestic equities. However, recent weeks have seen a return of positive FII inflows, offering hope for near-term stabilization.
India’s merchandise trade deficit widened to a 13-month high of USD 32.15 billion in September 2025, led by increased imports of gold, silver, fertilizers, and electronics. Exports, meanwhile, have been impacted by high US tariffs on sectors such as textiles and gems & jewellery.
For the first half of FY26, the merchandise trade deficit stands at USD 154.98 billion. While the deficit may persist despite potential tariff moderation, Emkay Wealth expects the Rupee to strengthen modestly if equity inflows sustain—possibly moving towards Rs.87.20–Rs.87.30 levels in the near term.
Given the external trade and rate dynamics, it would be prudent for corporates to hedge all near-term receivables and payables, the report advises.
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