More details were released on an interim US\u2013India trade deal, including tariff cuts and exemptions. The report states this would support India\u2019s external position.<\/p>\n
The report says USD\/INR could briefly fall below 90 in the coming months. It adds that any INR recovery is expected to be shallow.<\/p>\n
Forecasts in the report put USD\/INR at 89.50 in Q1 2026. It then projects a move back up to 93.00 by December 2026.<\/p>\n
The report links the later rise in USD\/INR to continued FDI repatriation. It also cites import demand and a wider current account deficit.<\/p>\n
It notes there may be political pushback in India related to agricultural concessions. The article says it was created with help from an AI tool and reviewed by an editor.<\/p>\n
We see the recent US-India trade deal as a positive for the Rupee in the short term. The tariff cuts should help push the USD\/INR exchange rate down toward our 89.50 target by the end of March. In fact, preliminary data from January 2026 already showed a 4.5% rise in exports, the strongest start to a year since we saw the post-pandemic recovery in 2023.<\/p>\n
For the next few weeks, we think buying put options on USD\/INR is a good strategy to capitalize on this expected dip. A strike price around 90.00 with an April 2026 expiry would capture the move toward our target. Looking back at the uncertainty in 2025, implied volatility has since fallen to a 12-month low of 4.8%, making this an inexpensive way to position for Rupee strength.<\/p>\n
However, we view this Rupee strength as temporary and traders should prepare for a reversal later in the year. Our forecast shows USD\/INR climbing back to 93.00 by the end of 2026. This is largely due to expectations of significant FDI repatriation, with central bank surveys from last year suggesting over $15 billion could flow out as early investments mature.<\/p>\n
Therefore, any dip toward the 89.50 level should be seen as an opportunity to build long positions for the second half of the year. We would consider buying call options with strikes around 91.00 or 92.00 that expire late in 2026. This aligns with the widening current account deficit we observed in the final quarter of 2025, which reached 2.8% of GDP and is a trend we expect to continue.<\/p>\n","protected":false},"excerpt":{"rendered":"
Interim US\u2013India trade deal details: tariff cuts, exemptions, brief INR gains, then USD\/INR rising through 2026.<\/p>\n","protected":false},"author":62,"featured_media":0,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-41898","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/41898","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=41898"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/41898\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=41898"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=41898"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=41898"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}