Goldman Sachs has warned that the Indian Rupee (INR) could tumble to 95 against the US Dollar (USD), even as the local currency fell to a record low today.
The Reserve Bank of India (RBI) has been actively intervening in the markets to cushion the slide, according to traders, as the fallout from the Iran war widens India's current account deficit.
Goldman Sachs recently revised its outlook for India, cutting growth forecasts for this year to 6.5% from 7%, while raising inflation estimates by 30 basis points.
The firm predicts the current account deficit will expand to 1.2% of GDP this year, up from 2025 levels.
India's government is expected to lean on fiscal tools rather than monetary policy to absorb the shock, with possible measures including lower excise duties on fuel or ramped up fertilizer subsidies.
Despite the geopolitical headwinds, Goldman remains "fairly optimistic" about the Indian economy's underlying strength.
