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Systematix Warns Rupee Faces 6.5% Annual Depreciation Path
Systematix says the Indian rupee may keep losing value over time.
It estimates an average yearly fall of about 6.5%.
The Reserve Bank of India has used foreign currency to support the rupee.
This may help for a while, but the brokerage says it does not fix deeper economic problems.
The rupee has already fallen from about ₹83 to nearly ₹97 per dollar in two years.
India is importing more than it exports, especially in trade with China.
Services exports also fell during the first quarter of FY27.
The RBI’s extra foreign-currency assets could provide about 10 months of import cover.
However, that protection could disappear quickly if interest rates rise or money leaves India.
Systematix estimates the rupee could follow an average annual depreciation path of about 6.5%.
The brokerage says RBI foreign-currency mobilisation may provide temporary stability but not resolve structural weakness.
The rupee has fallen about 17% in two years, from roughly ₹83 to nearly ₹97 per dollar.
India’s first-quarter FY27 trade deficit reached approximately $86.6-$86.8 billion, including a record deficit with China.
An additional $80 billion in foreign-currency assets could raise import cover to around 10 months, but may be quickly depleted during outflows.
- Who
- Systematix, an Indian brokerage, assessed the rupee’s outlook, while the Reserve Bank of India has been rebuilding foreign-exchange reserves.
- What
- Systematix projected an average annual rupee depreciation path of about 6.5% and warned that foreign-currency mobilisation may only delay pressure.
- Where
- India’s foreign-exchange market and external trade position.
- When
- The report was published on August 30, 2026, and discusses developments through the first quarter of FY27.
- Why
- Systematix attributed the pressure to productivity, capital flows, trade competitiveness, inflation, policy factors, and widening external deficits.
Structural-pressure view
Stabilization view
Effect of foreign-currency mobilisation
Structural-pressure view
Systematix argues that rebuilding foreign-currency assets can only postpone rupee pressure because productivity, trade, capital-flow, inflation, and policy problems remain unresolved.
Stabilization view
The Reserve Bank of India’s mobilisation provides additional capacity to intervene in the foreign-exchange market and could temporarily stabilize the rupee.
Adequacy of the currency buffer
Structural-pressure view
Systematix warns that the buffer could be rapidly drawn down if global interest rates rise or capital outflows intensify.
Stabilization view
The additional $80 billion in foreign-currency assets could increase import cover to around 10 months, providing near-term protection.
Exchange-rate adjustment and exports
Structural-pressure view
Systematix says the rupee’s depreciation has not strengthened exports sufficiently because Indian manufacturing depends on imported inputs and services exports have weakened.
Stabilization view
The rupee’s lower real effective exchange rate indicates that currency adjustment has occurred, although its stabilizing effect on exports may take time.
Key facts
- Projected annual depreciation
- About 6.5%, according to Systematix.
- Rupee movement
- The rupee depreciated about 17% over two years, from around ₹83 to nearly ₹97 per dollar.
- Foreign-currency assets
- An additional $80 billion could raise import cover to approximately 10 months.
- FY27 first-quarter trade deficit
- Approximately $86.6-$86.8 billion.
- China trade deficit
- The deficit reached a record level and was annualising at roughly $120 billion.
- Services exports
- Estimated at about $49 billion in the first quarter, down 18% sequentially.
- Real effective exchange rate
- The rupee’s real effective exchange rate fell about 17% since late 2024.
Sources
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