According to a report by Yes Bank, the Indian rupee may face significant depreciation, potentially falling to 97.00-97.50 against the US dollar in the first half of FY27, primarily due to the ongoing crisis in West Asia. The Reserve Bank of India (RBI) may need to adopt a flexible approach to manage these pressures. The report indicates that rising oil prices could disrupt the Indian economy's 'goldilocks' phase, leading to increased production costs and higher retail inflation. A 5% depreciation of the rupee could result in a 30-35 basis points rise in the Consumer Price Index (CPI). Furthermore, economic growth is expected to slow down as domestic consumption decreases and exports are affected by a global slowdown. The current account deficit is projected to widen to 1.6-2.0% of GDP, with a balance of payments deficit estimated at USD 44 billion if oil averages USD 85 per barrel. Weak foreign direct investment (FDI) and portfolio investments add to the economic challenges, as capital flows fail to cover the CAD. Despite potential RBI measures, underlying pressures on the rupee are anticipated to persist.