RBI revealed preference, intervention capacity, forward book overhang.
RBI intervention fatigue: reserves have dropped ~$38bn from the Feb peak of $728bn to ~$690bn in just 10 weeks, leaving the central bank unable to sustain aggressive dollar sales without compromising import cover, forcing continued controlled depreciation.
Brent crude at $110.84/bbl is near the $115 BoP break-even; each $10/bbl rise adds $12–15bn to India's annual import bill, structurally widening the current account deficit and maintaining persistent USD demand from oil importers.
RBI repo-Fed funds rate differential is only ~150bps with India CPI at 3.40% — well below the 6% threshold that would compel a hawkish pivot — giving the MPC no incentive to hike rates to defend INR, while $21bn in FPI outflows YTD 2026 continue to drain USD supply.
RBI maintains its neutral stance and does not hike repo rate above 5.75% in the next 12 months; if CPI prints above 5.5% for two consecutive months forcing a hawkish pivot, the INR depreciation path breaks materially.
The forecast assumes RBI will remain in 'intervention fatigue' mode and refrain from hiking repo above 5.75%, but this ignores the RBI's well-documented willingness to deploy macro-prudential tools (NDF intervention, FCNR(B) schemes, import duty adjustments) that can defend INR without rate hikes and without depleting reserves at the same pace.
If RBI announces an FCNR(B) deposit scheme or raises the FPI debt limit ceiling, attracting more than $10bn in capital inflows within 60 days, the 'policy paralysis / managed depreciation to ₹99.80' thesis is directly falsified without a single rate hike.