The Indian rupee has experienced its largest increase in seven years, providing the Reserve Bank of India (RBI) with an opportunity to rebuild its foreign exchange reserves. According to Jin10, this development follows the positive impact of the U.S.-India trade agreement, which may limit further strengthening of the rupee. Analysts from Barclays and Nomura Holdings predict that the RBI will take advantage of the rupee's recovery to purchase U.S. dollars. They recommend shorting the rupee, with Nomura forecasting the USD/INR exchange rate to reach 94 by May, while Barclays has set a similar target through a three-month offshore position.
Joey Chew, Head of Asia FX Research at HSBC Holdings, cautions that the rupee's path may not be smooth. The RBI's foreign exchange policy could complicate matters, as it has intervened unpredictably in recent months to prevent one-sided speculative positions on the rupee.