MUFG’s Michael Wan views the detailed US–India interim trade deal, including tariff cuts and exemptions, as positive for India’s external position. He sees scope for USD/INR to briefly break below 90 in coming months, but expects only a shallow INR recovery. MUFG forecasts USD/INR at 89.50 in Q1 2026 before rising back to 93.00 by year-end on FDI repatriation and wider deficits.

Tariff cuts help but upside later

"USD/INR: US and India provided more details around the interim trade deal. Overall we think it is a positive, and we forecast USD/INR at 89.50 by March 2026 and 93.00 by Dec 2026"

"Overall, we continue to think there is a good chance for USD/INR to break below the 90 level over the next few months but this will likely be a shallow recovery to reach"

"89.50 in 1Q2026."

"Over time, we continue to see USD/INR rising to 93.00 by 4Q2026, driven by continued FDI repatriation and import needs with a wider current account deficit."

"Overall we view the details as positive, notwithstanding some possible political pushback in India on some of the agricultural related concessions."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)