Importers should prefer option-based hedging for flexibility
Anindya Banerjee,
Head of Commodity and Currency Research,
Kotak Securities
Mumbai, March 23, 2026: The rupee is currently a hostage to developments around the Strait of Hormuz, with elevated energy prices driving a dollar liquidity squeeze and keeping pressure on emerging market currencies. As long as disruptions persist over the next 2–3 weeks into mid-April, USDINR could test the 96–97 zone in a worst-case scenario, with 95 and 96 acting as key resistance levels. However, this is largely a liquidity-driven move rather than a structural shift, and any easing in geopolitical tensions could trigger a sharp correction in energy prices and a relief rally in the rupee. In this uncertain, binary environment, importers should prefer option-based hedging for flexibility, while exporters can utilize spikes toward 95–96 and above to build forward hedges for the April–June quarter.
