Indian Rupee Expected to Face Pressures in 2025: Standard Chartered Report

The Indian rupee (INR) is projected to face significant challenges in 2025, driven by a combination of domestic and global economic factors, according to a report from Standard Chartered Bank. The bank’s analysis highlights several key pressures, including a slowdown in foreign direct investment (FDI) inflows, weak manufacturing export performance, and a narrowing of the interest rate gap between India and the United States.

The report outlines that “slowing FDI flows, weak manufacturing export growth amid decreasing global demand, and the narrowing policy rate differential with the US are likely to create downward pressure on the INR.” These factors are expected to contribute to a moderate depreciation of the currency in the coming year.

Standard Chartered forecasts the rupee to depreciate modestly, with a projected value of 85.5 INR per US dollar over the next 12 months. While some positive factors, such as India’s improving economic growth, attractive real yields, and the stable balance of payments bolstered by the country’s inclusion in the global bond index, offer support to the currency, these may not be enough to counterbalance the external and internal challenges.

Additionally, softer commodity prices and India’s robust foreign exchange reserves managed by the Reserve Bank of India (RBI) provide some stability to the rupee. However, according to the report, these positives are likely to be overshadowed by the broader economic pressures, leading to a modest depreciating trend for the rupee through 2025.