Commerzbank analyst Charlie Lay expects the dollar-rupee exchange rate to consolidate within a 94–97 range, FXStreet reported Oct. 26, as oil costs temper support from stronger Indian business activity.
India’s preliminary HSBC Flash India Composite Output Index, compiled by S&P Global, rose to 56.7 in October from 55.9 in September, reaching a four-month high. Services activity increased to 56.2 from 55.2. The manufacturing purchasing managers’ index eased to 54.9 from 55.1, but remained above 50, the threshold for expansion.
Lay sees oil as a constraint on the rupee’s recovery. Higher prices increase India’s import bill and could widen its current-account deficit, he said. FXStreet reported his view that lower oil prices, together with steadier portfolio flows, would help sustain a recovery. Those conditions form part of Lay’s outlook, rather than an announced exchange-rate target.
Oil also figured in an earlier decline in the rupee. Currency analysts cited by Press Trust of India linked that move to rising crude prices and weaker Indian shares.
The Reserve Bank of India (RBI) raised its policy repo rate by 25 basis points to 5.50% on Oct. 7 and adopted a calibrated tightening stance. It increased its real GDP growth forecast for fiscal 2026-27 to 7.1%, from the 6.7% forecast it issued in August. The central bank said its next move could be another increase or a pause, depending on economic conditions.
The October business survey offered a separate signal on prices. Reuters reported that growth in firms’ input costs was the slowest in almost a year, while their selling prices rose at the weakest pace since March 2025. Lay said the softer price readings may give the RBI room to leave rates unchanged in December, although further tightening remains possible.
The RBI’s next policy meeting is scheduled for Dec. 2-4.
