Analysts say the zone between 89.80 and 90.00 has now emerged as a strong base of support for the rupee against the US dollar.
The Indian Unity (INR) has depreciated by about 5 percent against the USD since August 2025, when the US imposed punitive tariffs on Indian goods.
Elara Capital economists said in a report that they expect this in the short termUSD/INR is reversing direction and heading towards 88.5-89 in the coming weeks as FPI flows change course.
“The REER (Real Effective Exchange Rate)-based valuation is at its lowest level since late 2014, suggesting that the USD/INR is undervalued. Even though DXY is trading with an upward bias, the USD/INR is likely to remain resilient as sentiment improves following the trade deal,” the report said.
Madhavi Arora, chief economist at Emkay Global Financial Services, noted that the rupee has borne much of the rate overhang (the worst Asian emerging market currency FYTD26), with a negative feedback loop impacting interest rate markets, equities and ultimately policymaking.
“Some of this noise could subside and possibly lead to a reversal in capital inflows. However, we note that some of the capital outflows are also due to FDI repatriation (largely PE exits) and not just FPI outflows,” she said.
Nomura said in a report that the positivity of the US-India trade deal announcement is likely to provide some short-term support for INR. The accumulation of RBI foreign exchange reserves, US product purchases and global risk markets are likely to continue to weigh on the INR.
Amit Pabari, MD, CR Forex Advisors, opined that from a technical point of view, the 89.80-90.00 zone has now emerged as a strong support base.
Published on February 8, 2026
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