Re vs Dollar: Has the Indian rupee bottomed out? Listen to Jefferies global head of equity strategy

Kolkata: One of the most significant financial developments of 2025 is the decline of the Indian rupee against the US Dollar. The rupee touched a record low of 91.14 against the greenback in December, raising concerns over rising prices of essential imports such as crude oil, gold, silver, electronic items and the like. The rupee has slipped more than 6% against the dollar making it one of the weak performers among the global currencies. The falling rupee also weighs negatively on the equities which have been witnessing a lot of FII outflow.

Therefore, the question on many lips is, has the Indian rupee bottomed out against the US Dollar? Interestingly, RBI bosses don't publicly admit that they follow any level to intervene. RBI governor Sanjay Malhotra recently said that they don't follow any such level and the value of the rupee against the Dollar is a function of demand and supply over which they are not losing sleep. Here, let's have a look at what Chris Wood, the global head of equity strategy at Jefferies and one of the most recognisable experts in the world of investing has to say on the matter.

Obviously Wood does not provide a definite view om the contentious topic. However, he indicates that worst for the rupee is possibly behind us. Significantly, India does not suffer from a yawning current account deficit or a fast decline of forex reserves, which could have been taken as classic symptoms of concern. However, the veteran investment expert thinks there could be range-bound trading of the Indian currency. This can continue as the much-awaited Indo-US bilateral trade pact keeps everyone waiting. Other factors are policy moves by the RBI and flow of FII investment. "The hope is that this is the bottom as regards the rupee," he mentioned in a note.

In the note rhetorically titled GREED & fear, Wood said that the speed of the rupee’s fall against the dollar surprised him. Though he mentions the FII outflow from the equity market this year and the rupee sailing past the 90 mark, he also mentions the couple of strong points of the Indian economy. One, the CAD or current account deficit which could be at just 0.6% of GDP in the current financial, which is close to a low in the past 20 years and the swelling forex reserves which now stand at $687 billion. This amount is supposed to be enough to pay for 11 months of imports.

He also mentions the gross FDI inflows at $81 billion in FY25 and $50 billion in April-September period in 2025. However, the net FDI is lower due to Indians investing abroad. Wood also mentions that the real effective exchange rate is still about 12% stronger than its 2013 dip during the taper tantrum. Real Effective Exchange Rate, or REER, is a measurement of a country's currency competitiveness by adjusting its nominal effective exchange rate for inflation differences with trading partners.