Rupee Poised for Move: Could Strengthen to ₹88 or Slide to ₹90.50 as Trade Deal Hangs in Balance

The Indian rupee finds itself at a critical juncture. With the outcome of a potential trade deal with the United States still uncertain, the rupee’s short-term path appears bifurcated: a positive agreement could lift the currency to around ₹88 per US dollar, while any delay may push it down toward ₹90.50.

The scenario is being shaped by several interlinked factors. First, the trade negotiations between India and the US remain unresolved. Market participants believe that a clear agreement would reduce external risk and boost the rupee. Conversely, further delay or deadlock may weigh heavily on sentiment and capital flows.

Second, portfolio flows and central-bank intervention continue to matter. With global liquidity tightening and foreign investor flows remaining cautious, the rupee is vulnerable to external shocks. The possibility that the Reserve Bank of India (RBI) may need to step in to stabilise the currency is widely discussed but not assured.

Here are the two scenarios in focus:

• If the trade deal is finalised soon, the rupee could surge to about **₹88/**USD – reflecting improved confidence, stronger capital inflows, and lower external risk.
• If negotiations stall further, the rupee may slip toward **₹90.50/**USD – driven by weaker sentiment, possible outflows, and elevated risk to trade balance.

Why these levels matter: Previously, around ₹88.40-₹88.80 has appeared as a soft floor for the rupee, supported by central bank activity. A sustained break below that might accelerate depreciation. On the upside, if sentiment supports it, the move toward ₹88 would reflect a significant recovery from recent stress.

What to Monitor

• The pace of progress in the India-US trade talks and any official announcements.
• Foreign institutional investor flows, especially into equities and debt, since these influence rupee demand.
• Crude oil prices, given India’s heavy reliance on imports — higher oil costs tend to weaken the rupee.
• RBI’s intervention signals and changes in reserves or currency swap data, which may hint at support or lack thereof.

Final Thoughts

The rupee’s next meaningful move hinges on a clear external catalyst. A trade deal would provide a positive jolt and could push the currency toward the ₹88-mark. But in the absence of progress, the risk of sliding toward ₹90.50 is real — making this a key period for foreign-exchange watchers and policymakers alike.