More information has come out about an interim US–India trade deal, including tariff cuts and exemptions. The report says this should support India’s external position. The report adds that USD/INR could briefly drop below 90 in the coming months. It also says any Rupee rebound is likely to be limited. The report forecasts USD/INR at 89.50 in Q1 2026. It then expects the pair to rise again to 93.00 by December 2026. It links the later rise in USD/INR to continued FDI repatriation. It also points to strong import demand and a wider current account deficit. The report notes there could be political pushback in India over agricultural concessions. It also says the article was created with help from an AI tool and reviewed by an editor. We view the recent US–India trade deal as a short-term positive for the Rupee. The tariff cuts should help push USD/INR down toward our 89.50 target by the end of March. Early data from January 2026 supports this view: exports rose 4.5%, the strongest start to a year since the post-pandemic rebound in 2023. For the next few weeks, we think buying USD/INR put options is a good way to benefit from this expected dip. A strike near 90.00 with an April 2026 expiry would position for a move toward our target. After the uncertainty of 2025, implied volatility has fallen to a 12-month low of 4.8%, which makes this a relatively cheap way to position for Rupee strength. We do not expect this Rupee strength to last, and we think traders should plan for a reversal later in the year. Our forecast has USD/INR rising back to 93.00 by the end of 2026. A key reason is likely FDI repatriation. Central bank surveys from last year suggest more than $15 billion could flow out as early investments mature. Because of this, we see any dip toward 89.50 as a chance to build long USD/INR exposure for the second half of the year. One approach is to buy call options with strikes near 91.00 or 92.00 and expiries late in 2026. This fits with the wider current account deficit seen in Q4 2025, which reached 2.8% of GDP and looks likely to keep widening.

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