India\u2019s January trade deficit rose to USD 34.7bn, above the Bloomberg consensus of USD 25.4bn and up from USD 25.0bn in December. The rise was linked to a 349% jump in gold imports as global prices increased.<\/p>\n
Commerzbank says the deficit may narrow in coming months, helped by the US-India trade deal and a pullback in gold prices. Despite the wider deficit, the rupee has remained steady.<\/p>\n
The bank expects USD\/INR to trade in a 90.00 to 91.00 range in the near term. It links this to slower portfolio outflows as market sentiment improves after the US-India trade deal.<\/p>\n
Looking back at early 2025, we saw a wide trade deficit of $34.7 billion in January due to a surge in gold imports. At the time, the expectation was for the USD\/INR to settle into a 90.00 to 91.00 range. That range held for a few months, but the landscape has changed considerably since then.<\/p>\n
As of today, February 20, 2026, the USD\/INR is trading closer to 92.50, well above that old range. While India’s most recent trade deficit for January 2026 narrowed to a more manageable $28 billion, persistent strength in the US dollar is the dominant factor. This is driven by the US Federal Reserve maintaining higher interest rates for longer than many anticipated.<\/p>\n
The improved sentiment from the 2025 US-India trade deal has faded, with portfolio flows turning negative in the new year. Foreign Portfolio Investors (FPIs) have pulled over $2 billion from Indian markets so far in 2026, creating pressure on the rupee. We are seeing a clear divergence as the Reserve Bank of India hints at supporting growth while the Fed remains focused on inflation.<\/p>\n
Given this context, derivative traders should anticipate higher volatility than we saw in mid-2025. Strategies like buying straddles or strangles could be effective to profit from expected price swings in the coming weeks. These options strategies benefit from movement in either direction, which is useful in an uncertain environment.<\/p>\n
For those with a directional view, the path of least resistance appears to be a weaker rupee. Buying USD\/INR call options or implementing bull call spreads would allow traders to capitalize on a continued move towards 93.00. This provides upside exposure while defining risk in case of a surprise reversal.<\/p>\n
However, we should not ignore the RBI’s history of intervention to curb excessive currency weakness. This suggests that a new, higher range may be forming between 92.00 and 93.50. Selling out-of-the-money USD\/INR put options with a strike price near 92.00 could be a viable strategy to collect premium, betting that the central bank will defend that level.<\/p>\n","protected":false},"excerpt":{"rendered":"
India\u2019s January trade deficit hit $34.7bn as gold imports surged; rupee steady, USD\/INR seen 90\u201391.00.<\/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-42334","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\/42334","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=42334"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/42334\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=42334"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=42334"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=42334"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}