Rupee at 100 by June 2027? Why Axis Bank flags record low risk despite RBI action
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- ✓Axis Bank flagged risks for the rupee, citing low forex reserve adequacy and high external debt.
- ✓The bank noted, “India’s foreign exchange reserve adequacy remains low across both traditional measures and the IMF’s Assessing Reserve Adequacy metric.” Despite lower crude oil prices, the brokerage expects the currency to face pressure.
Story at a Glance
- Category
- Indian Markets
- Reported By
- Financial Express
- Reading Speed
- 3 Minute(s)
- Market Focus
- India Economy
Axis Bank cited slowdown in AI-related investments in the US and low forex reserve adequacy among the key concerns.
What’s the big worry for the rupee?
India has already lost significant financial savings to FPI outflows in the AI rally, according to Axis Bnak. “More fragmented AI regulation and slower expansion in the US can bring back some lost savings to India,” Axis Bank noted.
India’s financeable current account deficit (CAD) may come back to around 0.8% of GDP, according to Axis Bank Research, as a reversal of foreign portfolio investor outflows over the past 12 months could improve India’s external financing position.
Higher foreign investment inflows would increase the supply of dollars in the domestic market and support the rupee. However, the brokerage believes these developments may not be enough to reverse the currency’s broader weakness.
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