Nomura Predicts Stronger Indian Rupee by December 2025

In a recent analysis, Nomura has projected that the Indian Rupee will strengthen against the US Dollar, reaching approximately 84 by December 2025. This optimistic forecast is based on a combination of a weaker dollar index and robust inflows into the Indian economy.

Factors Behind the Rupee's Expected Strength

The Japanese financial group attributes this potential strengthening to significant dollar acquisitions by the Reserve Bank of India (RBI) aimed at bolstering its reserves, currently standing at $677.8 billion. Additionally, Nomura anticipates India becoming a preferred investment hub in emerging markets, with an expected inflow of $15 billion in debt.

Global Economic Uncertainties and the Rupee

Amidst global economic uncertainties, Nomura's analysts suggest that the Indian Rupee will outperform, despite recent dips due to foreign portfolio investors selling Indian equities. The rupee had previously hit an all-time low of 87.92 in February, nearing the 88/$1 mark. However, future inflows in debt and equities are expected to reverse this trend.

Comparative Analysis with Other Currencies

Nomura Securities also forecasts a decline in the US dollar index to 2021 levels. Craig Chan, Nomura's global head of FX strategy, notes that while the RBI's active dollar purchases may initially make the rupee an underperformer compared to the euro and yen, the long-term outlook remains positive.

Contrastingly, Standard Chartered predicts a more conservative value of 87.75 INR against one dollar by the end of 2025.