India’s rupee is ‘fundamentally undervalued’, Chief Economic Adviser V. Anantha Nageswaran said adding that the present valuation offers a strong opportunity to nvestors looking at India
“For long-term investors, the rupee’s current valuation provides an attractive entry point,” V. Anantha Nageswaran told Bloomberg on Thursday.
The rupee remained under pressure this week as Brent crude stayed above $100 per barrel, erasing gains fueled by the central bank’s measures to curb speculative arbitrage bets that had pushed the currency to record lows last month. Owing to the Middle East conflict, which have tightened key energy supplies, the rupee stayed on a downward track for the fifth straight day, losing 24 paise to 94.25 against the US dollar in early trade on Friday
In fact, the rupee is Asia’s worst-performing currency so far in 2026, extending last year’s decline, as the Middle East conflict clouds growth outlook for a country heavily reliant on energy imports from the region. On top of that, heavy foreign investor outflow from Indian equities have added to the rupee’s weakness. Earlier this month, FPI outflow from equities surpassed last year’s record $18.79 billion annual exit
Despite the rising uncertainty, government officials have maintained a relatively upbeat growth outlook. Reserve Bank of India Governor Sanjay Malhotra said this month he is “cautiously optimistic” growth will reach 6.9% in the current financial year, even as some economists have lowered their forecast since the war began.
‘Economic normalisation could take longer’
Earier this month, Nageswaran had cautioned about the impact of rising oil prices on the global economy and said normalisation could a long time.
Nageswaran, while adressing a conference by US-India Strategic Partnership Forum, said the impact of the global conflict may be felt in four broad areas – higher energy prices, supply disruptions in other commodities, rising logistics and insurance costs, and a decline in remittance flows.
"So I think that we need to be more patient in the conflict cessation and the resumption of economic activity as per normal, that we may call it," he added
He said it was important to assess the extent of uncertainty created by the conflict, especially across South Asia and more broadly in the Asia-Pacific region. "It is not purely about the price of oil... it is about the commodities that matter," he said.
Speaking about India, he said, "The kind of challenges that India will face with respect to the global inflation and the external impact is something that needs to be watched." He further noted remittances, particularly from the Gulf nations, could also come under pressure.
(With inputs from Bloomberg and PTI)
