Financial experts and analysts have predicted that there will be a severe impact on the Indian market due to the 50% tariff imposed by the USA on India. Their prediction came true on December 3, when INR reached its record low value compared to the US dollar, i.e., 1 USD = 90.29 rupees. However, in the market, there is a mix of buzz; some economists are saying that the rupee will get stronger at the end of 2026, and some say, the rupee may even reach 100 or more. So, it is essential to map the USD to INR forecast by considering the key factors that are responsible for the valuation or devaluation of rupees.
Timeline of the USD to INR Price
Before forecasting the dollar to INR rate, you should look back at the history to gather key information that is associated with this cause.
During the time of the Independence of India, 1 dollar was equal to Rs 3.30, and reached Rs 4.76 in 1966. This year, India faced two post-war trauma and their effects, including high inflation, productivity drop, and more, which affected the Indian rupee to dollar rates, i.e., 1 USD to Rs 7.50.
Moving to 1991, this period was very critical because India was capable of importing oil and other goods for three weeks due to its low foreign exchange reserves. To manage this situation, the Government at that time came up with the LPG model, i.e., Liberalization, Privatization, and Globalization. But at that time, the dollar rupee exchange rate increased and reached Rs 26/USD.
Now moving back to 2008, and you must be familiar with this year because it was a global recession period, because of the fall of Lehman Brothers Bank in the USA, but it severely affected the Indian currency. The reason is, most foreign portfolio investors raised their hands from the Indian market and poured the money into the US market. As a result, the demand for dollars increased, and that depreciated the value of Indian currency.
In the current year, the dollar to rupee exchange rate today reached Rs. 90.29, which is a record low compared to the entire timeline.
Why Do Indian Rupees Keep Breaking Per Dollar Despite 8% GDP?
After examining the timeline and current value of the dollar in Indian rupee, it has been evident that there are a few key factors responsible for the fall of Indian currency despite the significant growth in GDP.
Imposition of 50% Tariff
In August 2025, US President Donald Trump imposed a 50% tariff on Indian goods that affected the Indian exporter; as a result, fewer goods reached the USA and reduced the inflow of dollars in India. In addition, the global price of crude oil, gold, and other goods is increasing heavily, but due to heavy tariffs, exports are less, which means less inflow of dollars, and imports are more that resulting in the outflow of dollars from India. So, this factor weakens the value of the rupee, and if this situation continues, then there is a high chance that the rupee will fall.
Exit of Foreign Investors From the Indian Market
Till March 2025, the foreign investors have sold Indian equities of $15.46 billion, and when the period reached October, the value of FII outflow reached $28 billion, which indicates a heavy outflow of dollars from India that is putting pressure on the Indian rupee. They walked out of the Indian market due to multiple reasons, such as tariffs, the dollar’s strength, and sluggish earnings.
So, to attract foreign investors so that they can pour dollars into the Indian market, the Government and RBI have to take necessary actions to build trust in them. If that happens, then the inflow of dollars will reduce pressure on the rupee, and it will become strong.
Little to no intervention of the RBI
The foreign exchange reserve of India is $700 billion, and foreign currency assets are $600 billion. To control the USD INR rate, RBI sold $64 billion, but experts believe that it was a defensive approach, and RBI would have taken strong measures to control this situation.
USD to INR Forecast 2025-26
After considering all the aspects, some prominent rating agencies and banks have forecasted the USD INR price for the next year.
Reuters Poll
A poll was conducted by Reuters, where analysts expressed their views about the exchange rate USD to INR in the future, and one-third of analysts believe that if the imposition of a 50% tariff remains, then there will be further depreciation of the Indian rupee, and it could reach 100.
Bank of America
Bank of America has shown an optimistic vision and believes that by the end of the year 2026, the value of USD to INR will improve and the rupee will get stronger, i.e., 86/dollar. The prime reason behind their belief is the strong domestic market of India, reforms in GST, and monetary policy change by the RBI (reduction in repo rate).
Australia and New Zealand Banking Group (ANZ)
The experts from ANZ are expecting that the Indian rupee will further weaken, and by the end of 2026, the rupee will be 91.30/dollar just because of the current tariffs and FII outflows.
Verdict - Should We Expect USD INR Price Recovery in 2026?
On December 3, 2025 Indian rupee hit a record low and reached 90.29/dollar due to multiple reasons, and it was not spontaneous. From August 2025, after the imposition of a 50% tariff, the trade deficit increased exponentially, because it affected Indian exports, and as a result, the inflow of dollars was reduced.
Moreover, FIIs have also sold their equities, and a heavy outflow of dollars from India took place, which puts heavy pressure on the Indian rupee and, as a result, the depreciation took place.
However, most experts believe that it’s a short-term consequence and in 2026, the Indian rupee will get stronger because of the high chances of a US-India trade deal. Once the deal is done, there is a high chance that the imposed tariff will be revoked, and that may make the rupee stronger.
FAQs
If the global interest rate is higher, then investors will get more returns, and they will invest heavily in such a country (the US), and will sell equities that they have in the Indian market, which means outflow of dollars from India.
Similarly, if the case is reversed, which means if the global rate is lower, then investors will look for the Indian market to get heavy returns, and as a result, the inflow of dollars will take place, which will strengthen the Indian rupee.
If India’s inflation is higher, then there will be a hike in imports because consumers will purchase goods from other countries that are cheaper, and likewise, exports will reduce because residents of the respective country will opt for the goods from their country due to the low price.
If there is a high fiscal deficit, it means the government is spending more than its earnings, and then it will increase public debt. As a result, the FIIs will hesitate to invest in the Indian market, and due to the same, less inflows of dollars in India and a fall of the rupee.
Foreign investors pour dollars into the Indian market, considering the global market, geopolitical situations, ties with the US, monetary policy, and other factors. So, if they get satisfied with the market, then they will inject dollars into the Indian market, which will reduce pressure on the rupee and hence help in recovery.
India imports 80% crude oil from the Gulf and other countries, and payment is made in dollars, so if there is a hike in crude oil price, then India will have to pay more dollars, and as a result, there will be more outflow of dollars, and it will weaken the Indian rupee.
RBI has sold $64 billion to control the fall of the Indian rupee, and also on December 5, 2025, announced to reduce the repo rate to stabilize the rupee.
