Indian Rupee continues to underperform amid elevates oil prices

• The Indian Rupee clings to losses around 96.35 against the US Dollar as oil prices remain higher.
• Petrol and Diesel prices in India hiked again in less than a week.
• FIIs turned out to be net buyers in the Indian stock market for straight three trading days.

The Indian Rupee (INR) holds onto its 10-day losses against the US Dollar (USD) in the opening session on Tuesday. The USD/INR pair trades firmly at around 96.35, close to its all-time high of 96.62 posted on Monday, as elevated oil prices due to restricted energy flows through the Strait of Hormuz continue to weigh on the Indian currency.

During the press time, the WTI Oil price trades marginally higher at around $102.16, but is close to its over two-week high of $104.74 posted on Monday.

Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high-oil price environment.

In response to the pressure of higher crude oil prices, the Indian government has announced a hike in petrol and diesel prices by 87 and 91 paise per litre, marking the second hike in less than a week. On Friday, prices of petrol and diesel were hiked by Rs. 3/litre.

Trump postpones planned attacks on Iran

The oil price rally appears to have hit pause for a while as the latest comments from United States (US) President Donald Trump have signaled that a deal with Iran could be confirmed soon.

On late Monday, US President Trump said that he delayed planned strikes on Iran after a “very positive development” in talks and that there was “a very good chance” they could reach a deal, The Guardian reported. Trump also stated on Monday, in an interview with Fortune, “I can tell you one thing—they [Iran]’re dying to sign [a deal].” The same day, a spokesperson from the Iranian Foreign Ministry said, “Iran is focused on ending the war at this stage,” while confirming that negotiations through Pakistan are still going on.

FIIs continue to increase stake in Indian stock market

Foreign Institutional Investors (FIIs) have remained net buyers in the Indian stock market over the last three trading days despite concerns over India Inc.’s earnings projections amid persistently elevated oil prices. On Monday, overseas investors poured investments worth Rs. 2.813.69 crore into the Indian stock market.

In the last three trading days, FIIs have cumulatively increased their stake worth Rs. 4,330.32 crore.

Higher US Dollar also strengthens USD/INR

A higher US Dollar due to firm US Treasury yields, with traders pricing out the possibility of interest rate cuts by the Federal Reserve (Fed) this year is also providing strength to the USD/INR pair.

During the press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.15% higher to near 99.10. 10-year US Treasury yields are slightly down to near 4.60%, still close to their yearly high of 4.63% posted on Monday.

The CME FedWatch tool shows that the possibility of the Fed holding interest rates at their current levels by the year-end is 53%, while the rest favors at least one interest rate hike this year.

Technical Analysis: USD/INR remains firm above 96.00

USD/INR trades firmly at around 96.35 as of writing. The pair extends its advance well above the 20-day exponential moving average (EMA) at 95.07 and preserving a clear bullish near-term bias.

The rising 20-day EMA under price hints that the underlying trend remains constructive, while the Relative Strength Index (RSI) at 70.13 is entering overbought territory, suggesting upside momentum is strong but increasingly stretched.

On the downside, immediate support is located at the 20-day EMA around 95.07, where buyers are likely to defend the prevailing uptrend on shallow pullbacks. A deeper correction below that dynamic floor would expose the recent breakout area closer to the mid-94s, although while price holds above the 20-day EMA, dips are likely to be viewed as corrective within the broader bullish structure. Looking up, the pair is broadly in uncharted territory and an attempt to extend the advance toward 97.00 is more likely.

(The technical analysis of this story was written with the help of an AI tool.)