New Delhi [India], November 16 (ANI): India’s currency, the rupee, may finally have reached its lowest point after a prolonged period of weakness, according to global financial services firm Jefferies. In its latest GREED & fear report, the firm indicated a “growing likelihood that the rupee has bottomed” following months of depreciation.
The report noted that the rupee has been “the worst performer year-to-date among major emerging market currencies,” having fallen 3.4 per cent in 2025 to trade near Rs 88.7 per US dollar. Jefferies stated that the currency appears to have stabilised after this significant slide, citing its analysis titled Good news for INR: 20-year low CAD and Improving FDI.
The firm attributed the rupee’s potential stabilisation to India’s resilient macroeconomic fundamentals. It highlighted that the current account deficit has narrowed to a 20-year low of 0.5 per cent of GDP, while foreign exchange reserves have risen to USD 690 billion—enough to cover 11 months of imports.
According to the report, Jefferies’ India strategist has “been assuming, so far correctly, that 89 should mark the bottom for the rupee,” signalling growing confidence that downside risks have diminished.
On the equities front, the report flagged significant foreign outflows, with near-record selling of USD 16.2 billion so far in 2025. This has contributed to India underperforming the MSCI Emerging Markets Index by 27 percentage points.
Despite this, Jefferies emphasised that domestic investors have more than offset the foreign withdrawals. Equity mutual funds saw net inflows of Rs 321 billion (USD 3.6 billion) in October and Rs 3.7 trillion (USD 42 billion) in the first ten months of 2025. Across all domestic channels, annualised inflows averaged USD 7.4 billion per month in the year’s first nine months—enough to absorb the steady equity supply of USD 5.7 billion per month.
Jefferies maintained a constructive outlook on India’s broader macroeconomic trajectory. It pointed to robust credit momentum, with bank credit growth rising from 9 per cent year-on-year in May to 11.5 per cent by mid-October. FDI inflows also remained strong: gross FDI increased 13 per cent year-on-year to USD 81 billion in 2024–25 and grew 18 per cent in the April–August 2025 period.
The report also highlighted India’s unique position in the global artificial intelligence cycle. Jefferies described India as the “reverse AI trade,” suggesting that if the global AI rally cools, India could outperform while AI-heavy markets face pressure.
“From the standpoint of the global emerging market asset class, it has to be conceded that India has become the reverse AI trade,” the report noted, adding that this dynamic could weigh more heavily on Taiwan, Korea, and China—markets that collectively represent 61.8 per cent of the MSCI Emerging Markets Index. India, by comparison, accounts for 15.3 per cent. (ANI)
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