FX METHODS - Weekly Treasury & FX Outlook | USDINR Analysis (1–5 June 2026)

USDINR Analysis (1^st to 5^th June 2026)

Previous week, USDINR experienced a sharp correction, closing at 95.04 after testing resistance near 95.80 (Weekly OHLC – 95.3525 – 95.7975 – 94.9550 – 95.0400 (-0.33%). Declining implied volatility to 6.20% points to a calmer near-term outlook, offering cost-effective hedging opportunities. Meanwhile, the rise in India’s 10-year bond yield to 6.99% supports the INR and reflects tightening domestic liquidity.

As RBI continues to maintain orderly market conditions, the currency is expected to trade range-bound to mildly INR-positive in the week ahead. Importers can consider increasing hedge coverage on the current dip, while exporters may look to stagger forward sales on rallies.

While the broader trend remains structurally bullish above 94.50, near-term momentum has shifted to neutral-to-bearish.

Technical Analysis

Candlestick Interpretation	Key Levels           Importer - Exporter	Trading Bias           Trader
The weekly candle formed a bearish reversal structure after testing 95.80. Failure to sustain above 95.75 resistance. Close near weekly lows (95.04). Indicates profit-booking in long USD positions. Momentum oscillators likely turning lower on shorter timeframes.	Resistance Level - Significance - 95.50 Immediate resistance - 95.80 Weekly high -96.00 Psychological barrier - 96.25 Breakout zone Support Level Significance - 94.90 Immediate support - 94.50 Strong support - 94.20 RBI comfort zone - 93.80 Structural support	Below 95.50 Bias remains corrective. Target 1:  94.80 Target 2 :  94.50 Above 95.80 Bullish momentum resumes. Target 1: 96.25 Target 2: 96.75

Implied Volatility Analysis

IV declined from 6.60% to 6.20%. – Interpretation

• Reduced fear of sharp USDINR moves.

• Lower hedging costs.

• Better environment for option structures.

Treasury Implication

• Importers can now purchase option protection at lower premiums compared to previous weeks.

• Exporters may find selling volatility less attractive due to compressed premiums.

Hedging Strategy

Importer	Exporter
Near-Term Exposure (0–2 Months) Current spot correction offers attractive hedging opportunities. Hedge Ratio: 40% – 60% Target hedge zone: 94.50 – 95.00 Instruments: Forward contracts Participating forwards Call spread Medium-Term Exposure (2–3 Months) Hedge Ratio: 50–60% Prefer: Zero-cost collars Layered forwards	Near-Term Receivables Since USDINR corrected sharply: Hedge Ratio: 30–40% Approach: Staggered forward sales. Wait for recovery toward 95.50–95.80. Medium-Term Receivables Increase hedge ratio if USDINR trades above:  95.75 Recommended: Range forwards Seagull structures Participating forwards

Scenario Matrix

Scenario	Probability	USDINR Target
Range Bound	50%	94.80–95.80
INR Strength	25%	94.20–94.50
USD Recovery	25%	96.00–96.50

Interest Rate Swap (IRS) Weekly Snapshot

Global IRS curves across USD, EUR, GBP, and JPY declined this week, with longer-tenor rates falling more sharply, reflecting expectations of policy easing and slower global growth.

• USD 10Y: 4.34% (-13.5 bps) | EUR 10Y: 2.98% (-16 bps) | GBP 10Y: 4.62% (-15 bps) | JPY 10Y: 2.50% (-10+ bps)

• Declines indicate markets pricing in potential Fed and ECB easing, moderation in BoE tightening, and cautious BoJ normalization.

Treasury Implications:

• Favorable for corporates locking floating-rate debt into fixed rates.

• Lower USD/EUR swaps reduce hedging costs for Indian borrowers.

• Opportunistic window for medium- and long-term foreign currency liability management.

Outlook: Global swap curves point to gradually lower interest rates ahead, offering Indian treasury teams a chance to optimize hedging and borrowing strategies.

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