Business EconomyPosted at: Apr 9 2026 1:44PM


Market forces drive March rupee fall; favourable opportunity for NRI investors to consider Indian markets

By Sourav Shekhar
New Delhi, April 9 (UNI) The depreciation of the Indian rupee against the US dollar in March reflects the workings of a market-determined exchange rate system amid global uncertainties, while also opening up opportunities for Non-Resident Indian (NRI) investors, according to experts.
According to data, the rupee depreciated by over 3pc alone in March in terms of USD, which is led by war escalation in West Asia and surging crude prices in international markets.
Adhil Shetty, CEO & Co-Founder of BankBazaar, said comparisons of the rupee's depreciation with other currencies should be made carefully, keeping in mind the differences in exchange rate frameworks.
"The comparison needs to be viewed in the context of differing exchange rate frameworks. The Indian rupee operates under a market-determined regime, so it reflects real-time adjustments to global factors such as capital flows, oil prices, and geopolitical developments," he said.
The Indian rupee is primarily determined by market forces of demand and supply in the foreign exchange market. It is a fiat currency managed by the Reserve Bank of India (RBI) and it is operating under a "managed float" exchange rate system since 1993.
He noted that recent movements have been sharper, with the rupee weakening meaningfully over the month and briefly testing lower levels against the US dollar. "This can result in higher visible volatility," he added.
Shetty pointed out that currencies under tighter management may show relatively lower day-to-day movement, but this is due to their operating framework rather than a true reflection of underlying pressures.
"In contrast, more tightly managed currencies may show relatively lower day-to-day movement, which is a function of the operating framework rather than a direct reflection of underlying pressures," he said.
Highlighting the broader macroeconomic picture, he said India remains on a strong footing. "From a macro standpoint, India remains well anchored, with comfortable foreign exchange reserves and a stable policy environment. The Reserve Bank of India continues to ensure orderly market conditions while allowing the currency to adjust in line with fundamentals."
Adding an optimistic perspective to the rupee depreciation in March, N ArunaGiri, CEO of TrustLine Holdings, said the current phase presents a favourable opportunity for NRI investors to consider Indian markets.
"For NRI investors, the current phase presents an interesting opportunity to look at Indian equities. The potential upside is not limited to equities alone, but extends to the currency as well. In our view, both have seen an element of overstretched selling in the recent phase," he said.
He explained that while the rupee has seen some recovery following regulatory measures aimed at curbing speculative positioning, it continues to remain undervalued on a Real Effective Exchange Rate (REER) basis.
"At current levels (sub-95), the rupee is trading meaningfully below its long-term equilibrium range of 100 to 102, indicating potential for appreciation as macro conditions normalize, particularly with easing geopolitical tensions in West Asia," ArunaGiri said.
He added that a similar trend is visible in equities, where easing geopolitical tensions could reverse selling pressure. "Any constructive resolution or de-escalation in the West Asia conflict is likely to ease selling pressure and trigger a reversal in market sentiment, as evidenced by the sharp bounce following the recent ceasefire announcement," he noted.
"In that sense, the current environment offers NRIs a dual opportunity to participate in the recovery of equity markets while also benefiting from a potential appreciation in the rupee. This remains our broad house view on the outlook for NRI investments into Indian markets," he added.
The views indicate that while the rupee's depreciation reflects global market dynamics under a flexible exchange rate system, it may also create strategic investment opportunities as macroeconomic conditions stabilise.
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