Pressure on rupee may continue after temporary gains on RBI actions, say economists

Recent gains in the Indian rupee may offer only short-term relief, with economists warning that pressure on the currency could continue despite actions by the Reserve Bank of India.

The rupee has already lost nearly 10% in FY26 and is on course for another weak performance in FY27. The outlook comes as overseas investors have removed a record $32.4 billion from Indian equities so far this calendar year.

RBI support has not changed the broader pressure

Economists described the currency's improvement after RBI actions as temporary rather than a decisive shift in its direction. While the central bank's measures have helped the rupee record gains, the currency remains exposed to continued pressure.

The scale of foreign fund withdrawals is a key factor in the current market backdrop. Overseas investors have already pulled out $32.4 billion from Indian equities this calendar year, marking a record level of withdrawals.

Weak outlook extends into FY27

The rupee's nearly 10% decline in FY26 has added to concerns about its performance in the next financial year. With economists expecting pressure to persist, the currency is facing the prospect of another poor showing in FY27.

For markets, the combination of a steep recent decline and heavy overseas selling highlights the limits of temporary gains. The immediate outlook remains focused on whether foreign equity outflows continue and how long the support from RBI actions can last.