Goldman Sachs is advising clients to take a bullish position on the rupee, using an exotic options structure, despite its latest decline to all-time lows.
Based on positive signals from developments in India-US trade talks – such as the reduction in Russian oil purchases by state refiners – Goldman Sachs analysts expect the rupee to appreciate by 1-2 percent if US tariffs on Indian goods are set at or below 25 percent.
The upbeat view comes despite the currency falling near a lifetime low of 88.80 against the US dollar on Monday.
BY THE NUMBERS
The company recommends buying a put option on the dollar-rupee pair with a strike price of 88, expiring in March 2026 and with a European knockout of 85.5.
The option is essentially a bet on a rally in the rupee. It pays off if the rupee appreciates, but it would be disabled – or expire worthless – if the dollar-rupee exchange rate falls below 85.50 at any time before maturity.
The knockout helps reduce the cost of the option.
The analysts also recommend another bullish bet on the rupee: a relative value position that bets the Indian currency will outperform the Indonesian currency over the next three months.
WHY IT’S IMPORTANT
The rupee has been the worst-performing major Asian currency this year after falling about 3 percent so far on concerns about high US trade tariffs and large outflows from local equities. Goldman is counting on better news on the rate front.
“In a scenario where rate talks stall, we expect the RBI to control the pace of INR decline and intervene more aggressively in the near term near 88.80, a level that the RBI has recently defended,” the analysts said in a note.
“We believe any rise in the INR is likely to be capped due to the RBI’s preference to reduce book short positions in a rising INR environment, along with higher corporate hedging activity.”
Published on November 3, 2025
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