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Below the Quote on Rupee by Anindya Banerjee, Head of Currency & Commodity Research, Kotak Securities

The USDINR has not reacted much to the somewhat dovish tilt from the US Federal Reserve. The Fed’s policy stance was full of mixed signals: while officials acknowledged labor market weakness as the reason for lowering rates, they also emphasized that inflation remains elevated. The Fed’s dot plot for 2026 is highly dispersed, underlining the uncertainty around the US economic outlook.

High-frequency data continues to point toward a cocktail of headwinds for the US economy. Since the Fed meeting, the US Dollar Index has largely moved sideways, yet the USDINR has climbed above 88. Trade uncertainty remains a key overhang. Until a trade agreement with the US is finalized, the Rupee is likely to stay under pressure from FPI outflows and speculative selling.

That said, the Rupee looks undervalued relative to its EM peers. Once a trade deal is signed, we could see some appreciation. In the near term, we expect USDINR to consolidate within a 87.70–88.70 range on spot.

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