Rupee Fundamentally Undervalued, Buy Now: CEA Nageswaran
Synopsis
CEA V. Anantha Nageswaran has called the Indian rupee 'fundamentally undervalued' and a buying opportunity for long-term investors, even as the currency hits ₹94.25 per dollar — its fifth straight day of losses — and earns the title of Asia's worst-performing currency in 2026 amid record FPI outflows and $100+ crude oil prices.
Key Takeaways
Anantha Nageswaran called the Indian rupee "fundamentally undervalued" and a strong buying opportunity for long-term investors on April 24, 2026 .
The rupee fell 24 paise to ₹94.25 per US dollar , marking its fifth consecutive session of losses .
The rupee is Asia's worst-performing currency in 2026 , extending a losing trend from the previous year.
FPI outflows in 2026 have already surpassed the previous record of $18.79 billion in annual exits from Indian equities.
Brent crude above $100 per barrel , fuelled by Middle East conflict, is a key driver of rupee weakness given India imports over 85% of its crude oil .
RBI Governor Sanjay Malhotra has maintained a 6.9% GDP growth forecast for the current financial year despite global headwinds.
New Delhi, April 24: Chief Economic Adviser (CEA) V. Anantha Nageswaran has declared the Indian rupee as "fundamentally undervalued", urging long-term investors to treat the current currency weakness as a strategic entry point into India's growth story. Speaking to Bloomberg, Nageswaran argued that while short-term headwinds are real, India's structural economic fundamentals remain intact and compelling for patient capital.
Rupee's Freefall: Where It Stands Today
The Indian rupee extended its losing run for a fifth consecutive session on Friday, slipping 24 paise to trade at ₹94.25 against the US dollar in early trade. This marks one of the sharpest sustained declines in recent memory, with the rupee now ranked as Asia's worst-performing currency in 2026 — a title it has held since the start of the year.
The immediate triggers include Brent crude prices holding above $100 per barrel, driven by escalating Middle East tensions that have disrupted global energy supply chains and stoked inflationary fears worldwide. India, as one of the world's largest crude oil importers, is disproportionately exposed to such shocks.
Foreign Investor Exodus Adding to Pressure
Beyond oil, the rupee is being battered by a relentless wave of foreign portfolio investor (FPI) outflows. According to available data, FPI exits in 2026 have already surpassed the record annual outflow of $18.79 billion recorded in the previous year — and this breach occurred earlier this month, well before the financial year closes.
This sustained capital flight from Indian equities has amplified downward pressure on the currency, creating a compounding effect where a weaker rupee discourages fresh foreign inflows, which in turn weakens the rupee further.
CEA's Optimism: The Long-Term Bull Case
Against this backdrop, Nageswaran's bullish stance is deliberate and calculated. His core argument is that the rupee's current valuation does not reflect India's medium-to-long-term economic trajectory. For investors with a multi-year horizon, this dip represents an opportunity to enter at a discount.
This is not the first time Nageswaran has flagged geopolitical risks. Earlier this month, addressing a conference organised by the US-India Strategic Partnership Forum, he outlined four key transmission channels through which ongoing global conflicts could damage economies: elevated energy prices, commodity supply disruptions, higher logistics and insurance costs, and declining remittance flows. He cautioned that a return to normalcy could take longer than markets currently expect.
Government's Growth Outlook Remains Cautiously Optimistic
Reserve Bank of India Governor Sanjay Malhotra recently projected that India's GDP growth could reach 6.9 per cent in the current financial year, even as several private economists have revised their forecasts downward following the latest geopolitical escalations.
This optimism from top policymakers contrasts sharply with the currency market's distress signals — a tension that investors and analysts are watching closely. The government appears to be betting that India's domestic consumption engine and structural reform momentum will ultimately override external shocks.
Broader Implications: What This Means for India
A weaker rupee is a double-edged sword. On one hand, it makes Indian exports more competitive globally, benefiting sectors like IT services, pharmaceuticals, and textiles. On the other hand, it inflates the cost of crude oil imports, electronics, and capital goods, feeding directly into domestic inflation and squeezing household budgets.
For ordinary Indians, a depreciating rupee translates into higher fuel prices, costlier imported goods, and potential upward pressure on interest rates if the Reserve Bank of India (RBI) is forced to defend the currency. The fiscal deficit also widens as the government's oil subsidy burden grows.
Notably, India's heavy dependence on energy imports — accounting for over 85 per cent of its crude oil needs — makes it structurally vulnerable to exactly the kind of geopolitical oil price shock currently unfolding. Critics argue that successive governments have not moved fast enough on domestic renewable energy transition to reduce this vulnerability.
As global geopolitical uncertainty persists and FPI outflows continue to test new records, all eyes will be on the RBI's next monetary policy decision and whether the central bank intervenes more aggressively in currency markets to provide a floor under the rupee. The coming weeks will be critical in determining whether Nageswaran's long-term optimism finds takers among global investors.
Point of View
' it is both a market signal and a damage-control exercise — the government is trying to arrest sentiment-driven selling before it becomes a self-fulfilling crisis. What's striking, however, is that record FPI outflows and Asia's worst currency performance are happening simultaneously with official growth optimism of 6.9 per cent — a contradiction that deserves scrutiny. India's structural over-dependence on crude oil imports, a vulnerability that policymakers have acknowledged for decades without adequately resolving, is once again the Achilles' heel. The real test of Nageswaran's thesis will come not from speeches, but from whether the government accelerates energy self-sufficiency and creates conditions that reverse the FPI exodus.
NationPress
1 May 2026
Frequently Asked Questions
Why did CEA Nageswaran call the rupee a buying opportunity?
CEA V. Anantha Nageswaran described the Indian rupee as 'fundamentally undervalued,' arguing that its current weakness does not reflect India's long-term economic growth potential. He believes the depressed valuation offers an attractive entry point for long-term investors betting on India's structural story.
What is the current rupee to dollar exchange rate in 2026?
As of April 24, 2026, the Indian rupee slipped to ₹94.25 against the US dollar in early trade, marking its fifth consecutive session of losses. The rupee has been identified as Asia's worst-performing currency so far in 2026.
Why is the Indian rupee falling so sharply?
The rupee is under pressure due to a combination of Brent crude prices above $100 per barrel driven by Middle East tensions, and record foreign portfolio investor (FPI) outflows from Indian equities that have already surpassed last year's annual record of $18.79 billion. India's heavy dependence on energy imports makes it especially vulnerable to oil price shocks.
What is India's GDP growth forecast for 2026?
RBI Governor Sanjay Malhotra has projected India's GDP growth at 6.9 per cent for the current financial year. However, some economists have revised their forecasts downward following the escalation in global geopolitical tensions.
How do FPI outflows affect the Indian rupee?
When foreign portfolio investors sell Indian equities and repatriate funds, they convert rupees into foreign currencies, increasing dollar demand and weakening the rupee. In 2026, FPI outflows have already surpassed the previous record annual exit of $18.79 billion, creating sustained downward pressure on the currency.
