Goldman Sachs analysts predict the Indian rupee’s slide may stabilize near 96 INR/USD after India’s Reserve Bank and government announced measures to attract $50 billion in foreign capital. The rupee hit a fresh low of 96.9650 last month amid crude price surges and equity outflows, prompting fears of further depreciation to 100 INR/USD. However, steps like tax exemptions on foreign investments and expanded debt access for institutions aim to reverse this trend. Goldman’s Kamakshya Trivedi notes these actions “should limit depreciation pressure,” though immediate spot appreciation isn’t expected. The bank revised its three-month forecast from 97 to 96 INR/USD, maintaining 97 for 12 months.

The measures include tax breaks for foreign buyers of government bonds, broader access to debt markets, and exemptions for banks issuing overseas currency loans. Analysts suggest these could spur $50 billion in inflows, leveraging the rupee’s higher carry compared to peers like the Indonesian rupiah. Goldman emphasizes the currency remains undervalued in the higher-yield emerging market complex, positioning it for reinclusion in diversified carry portfolios. While the rupee rose 0.4% to 95.36 after Friday’s gains, Trivedi cautioned that any inflows would likely fund reserve buffers rather than drive rapid appreciation. The Reserve Bank’s focus on stabilizing the currency contrasts with earlier volatility tied to global energy prices.

Goldman’s analysis hinges on whether inflows materialize as expected. If capital does not flow swiftly, the rupee could face renewed pressure. The bank’s revised forecasts reflect cautious optimism, balancing structural reforms against macroeconomic risks. Investors tracking emerging markets should monitor the $50 billion target as a key indicator of policy effectiveness. The rupee’s trajectory will also depend on external factors like crude prices and global risk appetite. For now, the 96 INR/USD level serves as a critical technical benchmark, signaling potential stabilization if sustained.