Regime risk, geopolitical scenarios, structural inflows.
Iran/Hormuz ceasefire fragility is the dominant near-term driver: Brent at ~$111/bbl (up ~70% YoY) is inflating India's import bill by an estimated $60–80bn annualized vs pre-war, sustaining structural USD demand and keeping the rupee pinned above ₹96.
FPI equity outflows of ₹2.20 trillion ($26bn+) YTD 2026 — surpassing all of 2025 — are creating persistent capital account pressure; IPO pipeline (Jio, Flipkart, Zepto, PhonePe: combined >$20bn potential) is actively deferred until geopolitical stabilization, removing a key INR support pillar.
RBI's ~$104bn net short forward book and declining FX reserves (from $728bn peak to ~$693bn mid-May) limit the central bank's capacity to defend the rupee aggressively; a Brent sustained above $115 would break the BoP bull case and force managed depreciation toward ₹98–100.
Scenario weight: 50% Base (Brent $105–115, fragile ceasefire holds), 25% Bull (durable Iran deal, Hormuz reopens fully, IPO pipeline fires H2 2026, INR to 90–93), 25% Bear (ceasefire collapses, Brent spikes above $125 sustainably, INR to 98–103). The single most critical assumption is that the current Iran ceasefire — however fragile — does NOT collapse into full-scale renewed conflict before end-June 2026; if it does, the Bear scenario dominates and the M12 point estimate shifts to ~100.
The agent assigns a 50% probability to the 'fragile ceasefire holds' base case as if geopolitical scenario probabilities are well-defined and stable, but the Iran/Hormuz situation has binary, discontinuous payoffs where the 25% bear scenario likely carries more than 25% of the expected INR downside impact, making the probability-weighted point estimate of ₹95.50 structurally understated.
If any single military incident closes more than 30% of Hormuz tanker traffic for longer than 14 consecutive days before end-June 2026, the 'fragile ceasefire holds' base-case probability collapses below 50% and the ₹95.50 point estimate is falsified upward by at least ₹3–5.