Barclays raises USD/INR target price due to oil price shock vulnerability

LootboxPhobia · 2026-03-24T15:00:01+00:00

Barclays raised its year-end target price for the USD/INR exchange rate to 96.80, as rising oil prices increase demand for US dollars, while India faces pressure from foreign exchange outflows. The rupee is expected to continue depreciating. The Reserve Bank of India is not rushing to intervene, and a widening trade deficit further pushes the rupee weakness.

LootboxPhobia

2026-03-24 15:00:01

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Investing.com - Barclays has raised its year-end target for USD/INR to 96.80, citing the Indian rupee’s vulnerability to oil supply shocks and the ongoing deterioration of the balance of payments.

The investment bank stated that rising oil prices are expected to increase dollar demand from importers, putting greater pressure on the rupee. India’s financial account faces dual outflows from foreign direct investment and foreign securities investments.

Barclays said that the outlook for continued rebound in equity capital inflows remains weak. The firm believes there are asymmetric risks for the currency pair, with any decline in USD/INR likely to be shallow, while dollar appreciation could have a more significant impact.

The bank noted that the Reserve Bank of India does not want to deplete foreign exchange reserves to reverse the rupee’s direction and is comfortable with a gradual depreciation of the rupee. Barclays pointed out that the RBI is not seeking to actively defend the currency’s current level.

Barclays stated that India’s widening trade deficit with China provides further motivation for the Reserve Bank of India to maintain the rupee’s relative weakness against the yuan. The firm said this trade imbalance increases the reasons to allow the currency to continue depreciating.

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