According to a recent report by DSP Mutual Fund, betting against the Indian rupee is deemed a low-probability trade due to its current undervaluation. The rupee's Real Effective Exchange Rate was recorded at 89.7 as of April 2026, and it is estimated to have fallen below 88 recently, making it one of the most competitive periods for the currency outside of major financial crises. Furthermore, India's inflation differential with the United States has narrowed significantly, averaging around 1-2%, compared to the historical norm of 3.5-4%. This trend suggests that the long-term depreciation rate of the rupee may decelerate rather than accelerate.

The report highlights India's robust structural buffers, including annual services exports exceeding USD 418 billion and a net invisible shield of approximately USD 349 billion, which can offset the anticipated merchandise trade deficit. Although Foreign Portfolio Investments (FPI) have seen net selling, large-cap stocks are now trading at more attractive valuations, which could stabilize market conditions. Overall, the report emphasizes that the current economic indicators favor rupee-denominated assets, making a bet against the rupee less likely to succeed.