Will the Rupee hit 100? 3 critical triggers that could push India’s currency to historic lows by year-end – Market News

The month of April witnessed the currency trade between the 93 – 95/$ band against the US dollar. With the domestic currency now nearing the 96/$, markets are increasingly questioning whether the rupee could slip into the three-digit territory against the greenback.

In just over a month, the domestic currency logged in both one of its single day best gains and steepest declines. Over the past year the currency has depreciated by more than 10%, and on a year-to-date basis it has weakened by nearly 5%.

The prolonged West Asia crisis, leading to a sharp uptick in oil prices continues to weigh on the currency. Higher oil price weighs negatively on emerging market currencies like rupee, as oil is predominantly traded in dollars and India is a net oil importer. 

Can the Rupee slide to 100/$?

Currency market experts note that while the probability of the rupee striking a century against the US dollar remains low, it cannot be ruled out. 

As per, Madan Sabnavis, Chief Economist, Bank of Baroda, the course of the war and crude prices will dictate the trajectory of the currency.

“At levels of less than 100/barrel, the rupee will definitely strengthen and be range bound between 94-95/$. On the other hand, if it’s in the 110-120/barrel band it can test the Rs 96 level too,” said Sabnavis. 

While, Anindya Banerjee, Head Of Commodity and Currency Research, Kotak Securities said that for the currency to test the 100 levels, three things need to unfold together.

“Hormuz tension needs to worsen further with no resolution to the flows; oil prices need to be allowed to run toward the 2008 highs of near $150 on Brent; and FPI outflows need to persist at the March–April pace,” added Banerjee. 

Echoing a similar tone, Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities said that, “Rupee 100 by end-2026 cannot be ruled out if current macro pressures continue, especially with crude oil remaining elevated and geopolitical tensions unresolved.”

But the story doesn’t end at oil

FII outflows another key concern for rupee

While the recent weakness in the domestic currency is largely being attributed to the surge in oil prices, currency market experts believe there are broader factors at play. Persistent withdrawal by foreign investors from the domestic markets has been constantly adding to the downside for the currency. 

“Oil is not the only factor driving depreciation. Persistent FPI/FII outflows, a strong US dollar environment, widening trade deficit, and higher imported inflation are also contributing significantly to rupee weakness,” said Trivedi.

In 2025, foreign investors pulled out a record Rs 1.54 lakh crore from domestic markets, remaining net sellers for seven of the twelve months. The outflows have continued unabated, with FPIs having sold Indian equities worth more than Rs 2 lakh crores so far this year.  

Experts note that while the RBI has increasingly intervened, especially during  times of increased volatility, the continued FPI selling pressure limits the scope for upside, as foreign investors venture into other markets.

“Currency depreciation and concerns surrounding earnings growth in India have been important factors driving FPI flows out of India this year. The impressive earnings growth expected in markets like South Korea and Taiwan this year, thanks to the AI boom, is attracting FPI flows into these markets in a big way,” said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

“Beyond oil, the single dominant non-oil pressure on the rupee is the scale of the FPI exodus — roughly $21 billion of cumulative outflows across March, April and the first week of May. That is an unprecedented quantum over a 10-week window, and it is what is overwhelming the RBI’s defence in the spot market,” noted Banerjee.

Will RBI bring in new policy measures?

Last year, RBI Governor, Sanjay Malhotra had stated that the central bank has no specific target levels for the currency. However, media reports suggested that RBI could reintroduce the foreign currency non-resident deposit (FCNR) route to mobilise dollar inflow.  

The scheme which allows NRIs, OCIs and PIOs to park their foreign currency earnings in Indian banks was last used in 2013 as a means of survival mechanism to curb the rupee’s fall. 

Experts differ on whether this emergency measure would be brought forth but have certainly not ruled out the probability. 

“Presently I don’t think it will be done as RBI is letting the rupee find its level and is intervening only when there is excess volatility. But if reserves fall to levels of less than 9-10 months imports, this can be on the discussion table,” said Sabnavis. 

Meanwhile, Anindya Banerjee of Kotak Securities says that the chance of it being re-introduced is unlikely. “Neither the RBI nor the Centre has signalled any such move so far, and at this point it looks unlikely,” he said.  

According to him, the central bank will continue relying on spot and forward market intervention, along with other macro-prudential levers, to manage volatility. 

“FCNR(B) and steps like a withholding tax cut on FPI investments in government bonds are options on the table, but they are second-order tools that get pulled out only if the primary defence proves insufficient,” the analyst at Kotak noted. 

What’s the longer term outlook?

Over the longer course of time, these experts suggest that the outlook for the currency remains weak, stating that the currency will likely hover within the 93-95 range. 

“Technically, the longer-term outlook remains weak unless the rupee sustains above 93. Key resistance is placed near 93.00, above which a stronger recovery towards 90.00 is possible. On the downside, 95.50–96.50 remains a major support zone, and if breached decisively, the rupee could move towards the 99.50–100 zone over the longer term,” said Trivedi.

While  Sabnavis of Bank of Baroda placed 94/$ as the lower level. “I don’t think there will be any level on the upper side that will get support from RBI. But every rupee change i.e. 95 to 96 Vs dollar will make RBI look more closely at the factors driving the rupee,” he said 

Conclusion

Last year, around this time the currency was trading near the 84-85 range against the US Dollar. Tensions pertaining to US-India trade tariffs, alongside geopolitical developments, added steep declines to the domestic currency, which primarily drove foreign investors away from the Indian markets. 

Overall, FII flow trends along with crude levels remain key determinants of the currency’s trajectory and whether it could slip to the 100/$ mark. Most analysts however believe that for now the chance of it is fairly low.