The Indian rupee has experienced a more pronounced decline than the US dollar since April this year, despite a late-week recovery. This trend has led to a significant weakening of the rupee against a basket of other global currencies.
From Slide to Partial Recovery: A Volatile Week
In a volatile trading period, the rupee touched a low of nearly 91 against the US dollar before staging a comeback. By Friday, December 19, 2025, it managed to pare some losses, closing at Rs 89.27 per dollar. However, this recovery was not enough to offset its broader downward trajectory observed over the past several months.
Rupee Underperforms the Dollar's Own Decline
Analysts point out a critical detail: the rupee's depreciation has outpaced the dollar's own decline in the same period. This means that while the US dollar has lost value in international markets, the Indian currency has lost even more. Consequently, the rupee's exchange rate has deteriorated sharply against other major and emerging market currencies, not just the greenback.
Official Outlook: SBI Predicts a Turnaround in 2026
In their latest Ecowrap report, the economic research team at the State Bank of India (SBI), led by chief economic adviser Soumya Kanti Ghosh, has provided a forward-looking assessment. The report indicates that the current phase of weakness may be temporary. The SBI economists project that the rupee is likely to bounce back next year, suggesting a more positive outlook for the currency in 2026.
The team's analysis considers various domestic and global factors that could contribute to this anticipated stabilization and recovery. While the recent slide has raised concerns, the forecast from India's largest bank offers a note of cautious optimism for investors and the economy moving forward.
