New Delhi, Feb. 5 -- Indian rupee is expected to depreciate by around 2 per cent to the 92 level against the US dollar by the end of 2026, despite the short -term relief rally following the announcement of the US-India trade deal on January 3, according to a report by UBS.

The report stated that after the trade deal announcement, the rupee could temporarily strengthen to around 89 against the US dollar, largely due to a repricing of the political risk premium. This could also lead to tactical short-covering of bearish rupee positions in the near term.

However, UBS believes that the scope for a sustained rebound in the Indian currency remains limited. One of the key reasons cited is the Reserve Bank of India's preference to continue buil...