Goldman Sachs backs bullish rupee wager banking on tariff turnaround
Goldman Sachs is advising clients to take a bullish position on the rupee, using an exotic option structure, despite its latest slide toward its all-time low.
Taking positive cues from developments in India-US trade negotiations — such as the reduction of Russian oil purchases by state-run refiners — analysts at Goldman Sachs expect the rupee to appreciate by 1-2 per cent if US tariffs on Indian goods are set at or below 25 per cent.
The upbeat view comes despite the currency on Monday dipping near its lifetime low of 88.80 to the US dollar.
BY THE NUMBERS
The firm recommends buying a put option on the dollar-rupee pair with a strike price of 88, expiring in March 2026 and with a European knock-out at 85.5.
The option is essentially a bet on a rally in the rupee. It pays off if the rupee appreciates, though it would be knocked out — or expire worthless — if the dollar/rupee exchange rate drops below 85.50 at any point before expiry.
The knock-out helps lower the cost of the option.
The analysts also recommend one more bullish wager on the rupee — a relative-value position that bets the Indian currency will outperform its Indonesian peer over the next 3 months.
WHY IT’S IMPORTANT
The rupee has been the worst-performing major Asian currency this year, having fallen about 3 per cent so far due to concerns over steep US trade tariffs and heavy outflows from local shares. Goldman is counting on better news on the tariff front.
“In a scenario where tariff discussions stall, we expect the RBI to manage the pace of INR depreciation and intervene more aggressively near 88.80 in the near term, a level which RBI had been defending recently,” the analysts said in a note.
“We believe any INR appreciation will likely be capped due to the RBI’s preference to trim forward book shorts in an appreciating INR environment, along with higher corporate hedging activity.”
Published on November 3, 2025