New Delhi, Jan. 3 -- The pace of rupee depreciation is expected to slow significantly in 2026, after the Indian currency endured its weakest year since 2022 amid foreign fund outflows, trade uncertainty and elevated hedging demand, according to SBI Funds Management.

The rupee fell close to 5% in 2025, underperforming most emerging-market peers even as the US dollar weakened globally.

However, SBI Funds Management's 2026 Outlook projects the currency to depreciate by only around 2% in FY27, with the exchange rate expected to stabilise near Rs 92 to the dollar.

The outlook is supported by several factors. India's CAD is projected to remain below 1% of GDP, aided by strong services exports and subdued oil prices. At the same time, the US ...