Exchange Rates & Currency Deals

USD/INR above 90-day avg, near the top of the 3-month range. Fed seen moving to neutral in 2026; RBI policy unclear, keeping USD bid. RBI FX interventions defend the rupee amid outflows and a widening trade deficit; range likely to hold unless data/policy surprises. Bias bullish-to-range-bound, as USD/INR sits above its 90-day average and in the upper half of the three-month range. Key drivers - Rate gap: Markets expect the Fed to cut rates toward a neutral stance in 2026, while RBI policy remains less clear, leaving the USD supported against the rupee as flows and investment moves respond to policy differences. - Macro: RBI FX interventions to stabilize the rupee continue amid ongoing capital outflows and a widening trade deficit, with authorities signaling steady defense of the currency while imports and external financing conditions remain sensitive. Range USD/INR likely drifts within the recent three-month range, with a tendency to hover near the upper area rather than break decisively, unless key data surprises or policy signals shift. What could change it - Upside risk: stronger US data or a less dovish Fed could push the dollar higher, particularly if risk appetite improves and energy prices firm. - Downside risk: clearer Fed easing, or renewed RBI support that steadies the rupee, could pull the pair lower if domestic data also strengthens policy credibility