Goldman Sachs Forecasts Rupee Sliding to 95 Per Dollar Amid Iran Conflict

Goldman Sachs projected India's rupee will weaken to 95 per dollar over the next year, with the Iran conflict driving oil-price pressures that are widening the country's current account deficit and threatening to force the Reserve Bank of India's hand on monetary policy.

Santanu Sengupta, Goldman Sachs Group Inc.'s chief economist for India, made the call in an interview with Bloomberg TV's Haslinda Amin. "The rupee remains under pressure in our view, given the current account deficit is widening," Sengupta said. The forecast puts Goldman on record as one of the more bearish institutional voices on the rupee, tying a specific exchange-rate target directly to the geopolitical fallout from the Iran conflict rather than to domestic economic cycles alone.

The pressure on the rupee flows through a familiar channel for net energy importers: higher oil prices inflate the import bill, stretch the current account, and weaken the currency. If that dynamic accelerates inflation, the RBI faces a difficult choice between defending price stability with rate increases and cushioning an already-pressured currency and economy.

Goldman Sachs economists separately revised inflation forecasts upward for several Asian economies, projecting average increases of 0.3 to 0.5 percentage points across the region if current oil prices persist. No country-by-country breakdown was provided, but the band signals the firm views the inflation transmission from oil to consumer prices as meaningful and sustained rather than transitory.

India is not alone in its exposure. Standard Chartered's Asia FX strategist May Ling described the convergence of forces hitting regional currencies in blunt terms. "The combination of geopolitical risk and commodity price sensitivity creates a perfect storm for Asian currencies," she said, adding that "net energy importers like India, Thailand, and the Philippines face immediate balance of payments pressures." The framing underscores that the rupee's vulnerability is structural: India's dependence on imported energy leaves its external accounts acutely sensitive to any sustained rise in crude prices.

Analysts have outlined two plausible paths from here. In a baseline scenario where the Iran conflict remains contained and de-escalates gradually, oil prices stabilize near current levels and Asian currencies recover roughly half of their recent losses. The more troubling path involves broader regional escalation pushing oil above $100 per barrel, which would trigger further currency depreciation and likely force central banks across the region into more aggressive intervention and potential interest rate adjustments.

For the RBI, the calculus is particularly acute. A rupee at 95 per dollar would represent a significant depreciation, and the knock-on effect on import prices could push inflation well beyond the central bank's comfort zone. Whether the RBI moves preemptively or waits for inflation data to confirm the pass-through remains the key policy variable to watch as the conflict's trajectory becomes clearer.