The Indian rupee is expected to remain defensive on February 16, 2026, weighed down by persistent dollar strength and heavy government bond supply, while bonds react to increased issuance pressures. As of February 13, USD/INR stood at 90.5610, reflecting a 0.35% monthly weakening and 4.49% annual decline against the dollar.
Rupee Trends
The rupee has hovered near 90.50-90.60 recently, hitting a 2026 high of 92.29 in January amid global uncertainties and U.S. policy shifts under President Trump. Traders anticipate mild depreciation toward 90.75-91.00 this week due to importer dollar demand and RBI interventions to curb volatility.
Bond Market Dynamics
Indian government bonds face selling from high supply in weekly auctions, with the 10-year yield likely rising above 7.05% as fiscal deficit concerns linger post-2025 budget. Foreign portfolio inflows slowed to $2.5 billion YTD, limiting support amid elevated U.S. Treasury yields.
Key Influences
- Global Factors: Strong U.S. data bolsters the dollar; oil above $75/barrel adds import bill pressure.
- Domestic Outlook: RBI may sell dollars if rupee breaches 91; bond stabilization eyed via OMO purchases.
Forecasts peg USD/INR at 90.36 by Q1 end, potentially easing to 89.01 in 12 months with rate cuts.
