Dollar–rupee outlook for 2026: forecasts diverge as markets brace for a range-bound currency

Key Highlights

• The bank forecasts the USD/INR rate at around ₹86 per dollar by end-2026, arguing that recent rupee weakness has largely stemmed from external pressures.
• A softer US dollar environment, it says, could lend support to a gradual appreciation. STORY CONTINUES BELOW THIS ADIn contrast, Japanese financial group MUFG sees continued weakness in the rupee through 2026.
• “Our forecasts imply further INR weakness against key currency crosses such as the euro, Japanese yen and Chinese yuan,” the bank said, pointing to unfavourable global currency dynamics. More from Business Hyundai India’s Rs 27,870 crore IPO oversubscribed by 2.28X, largely driven by institutional investors How Indian fintech startups are driving Malaysia’s UPI-like digital payments revolutionCredit rating agency Fitch takes a more balanced view, projecting the rupee to recover towards ₹87 per dollar by the end of 2026.
• Fitch attributes this outlook to India’s robust growth trajectory and relatively benign inflation, which it believes will underpin medium-term currency stability. Independent economists, however, remain cautious.
• Several analysts believe the rupee could trade in the ₹90–92 range for much of 2026 if global uncertainty persists.