Rupee outlook: Currency seen stabilising after 4% slide this year; traders eye India–US deal for next cues

The Indian rupee, which has been under persistent pressure through 2025, is unlikely to witness any sharp fall in the immediate term as its recent weakness has already played out, Union Bank of India said in a recent assessment. The bank noted that the currency has already slipped about 4 per cent this year and is currently stuck in a narrow band, weighed down by firm US dollar strength, capital outflows and uncertainty linked to the delayed first tranche of the India–US BTA.The rupee has been trading close to record lows, briefly touching 89.4950 in recent sessions, as foreign institutional investors have withdrawn over $14 billion since January, as per ANI. The bank said easing inflation and GST-related reforms were helping cushion some of the external strain. “Given that the rupee has already weakened by roughly 4 per cent this year, we do not expect significant further depreciation in the near term,” the report stated. It added that once clarity emerges on the trade agreement, “the appreciation threshold for the currency should shift”.Union Bank expects the rupee to remain range-bound between 88.80 and 89.50 through December, with strength likely only if there is sustained domestic equity inflow or “tangible progress” on the BTA, which could pull the currency toward 88.50 per dollar. If the pact is finalised alongside an RBI rate cut, improved FII sentiment and an anticipated US Fed easing cycle, the bank said the rupee could strengthen meaningfully. Any bearish turn, however, is expected to meet strong resistance near 89.50, with a breach opening the door to 89.90.Recently, the rupee settled at 89.45 on Friday, slipping 9 paise as a stronger greenback, firmer crude and weak equities dragged sentiment. Traders stayed cautious ahead of GDP data, which later showed the economy growing 8.2 per cent — the highest in six quarters. Forex analysts quoted by PTI said that month-end dollar demand and continued outflows were keeping the rupee pinned, even as the USD-INR pair faces resistance at 89.70 and finds support at 88.80.The rupee closed at 89.4575 in the latest session, just shy of its record low of 89.49 hit a week ago, with markets watching geopolitical developments, US tariffs and progress on the India–US deal for fresh direction.