USD/INR: Positive surprise from tariff reductions – MUFG

Senior Currency Analyst Michael Wan highlights a surprise US–India trade deal cutting tariffs to 18% from 50%, which he views as INR-positive in the near term. MUFG now forecasts USD/INR at 89.50 in Q1 2026 and 93.00 by Q4 2026, seeing dips as opportunities to rebuild long Dollar positions despite improved portfolio inflow prospects.

Tariff reductions boost INR outlook

"Near-term, we lean towards seeing USD/INR trading lower given these dynamics, and would watch closely to see if key support levels around 89.50 to 90.00 hold."

"Medium-term, we hold onto our view for USD/INR to move higher, and as such think moves lower in USD/INR over time are good opportunities for corporates and our clients to rebuild long USD/INR positions for this year."

"Overall, we tentatively adjust our forecasts and target USD/INR at 89.50 in 1Q2026 and 93.00 by 4Q2026 (from 91.50 and 94.00 previously), implying some frontloading of portfolio inflows from what we anticipated previously."

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