MUFG’s Michael Wan sees the detailed US-India interim trade agreement, including tariff cuts and exemptions, as a positive for India’s external position. He sees scope for USD/INR to slide below 90 in the coming months, but expects only a modest INR recovery. MUFG forecasts USD/INR to remain at 89.50 in Q1 2026 before rising to 93.00 by the end of the year due to FDI repatriation and widening deficit.
Tariff cuts help but backfire later
“USD/INR: US and India provide more details on interim trade agreement. Overall we think this is positive, and we forecast USD/INR to reach 89.50 by March 2026 and 93.00 by December 2026.”
“Overall, we believe there is a good chance of USD/INR breaking below the 90 level over the next few months, but a shallow recovery to reach this level will likely be difficult”
“89.50 in 1Q2026.”
“Over time, we see USD/INR rising to 93.00 by 4Q2026, driven by continued FDI repatriation and import requirements coupled with a widening current account deficit.”
“Overall we view the details as positive, despite some potential political opposition in India over some agricultural concessions.”
(This article was created with the help of an artificial intelligence tool and reviewed by an editor.)
