New Delhi, May 23 -- Betting against the rupee at current levels is a low-probability trade, and the data now favours allocating toward rupee-denominated assets across both equities and bonds, a report by DSP Mutual Fund has suggested.

The rupee's Real Effective Exchange Rate was at 89.7 at the end of April 2026 and is estimated to have slipped below 88 when USD-INR breached 96.9 on May 20, 2026, BIS data shows. Outside of the 2013 twin deficit crisis and the 2008 Global Financial Crisis, this is the most competitive the currency has been. On a trade-weighted basis, the rupee is fundamentally undervalued, creating a strong margin of safety for investors, the report says.

India's inflation differential with the US is also at one of its n...