USD/INR refreshes all-time highs near 93.70 as Indian Rupee deteriorates further
- The Indian Rupee slides to a fresh all-time low at 93.70 against the US Dollar.
- Consistent foreign outflows from the Indian stock market have dragged the Indian currency.
- The Fed is expected to hold interest rates steady for longer.
The Indian Rupee (INR) extends its downfall against the US Dollar (USD) in the opening trade on Friday after a holiday the previous day. The USD/INR pair rises to near 93.70 as the Indian currency continues to face significant pressure from consistent foreign outflows from the Indian stock market and higher oil prices amid conflicts in the Middle East, and a decent recovery move in the US Dollar.
FIIs keep paring their stake in Indian equity market
Overseas investors have been consistently dumping their stake from the Indian stock market as higher oil prices due to the joint assault by the US and Israel against Iran have prompted uncertainty over earnings expectations of the Nifty 50 for the fourth quarter of FY 2025-26.
Theoretically, companies bear the burden of increased input costs by allowing a hit on profit margins or passing on to consumers, which both result in a deviation between projected earnings and actual numbers.
So far in March, Foreign Institutional Investors (FIIs) have remained net sellers in all trading days and offloaded their stake worth Rs. 81,262.5 crore.
US Dollar recovers after Thursday’s sell-off
During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades almost 0.3% higher to near 99.45. The USD Index recovers from Thursday’s low of around 99.00 amid the speculation that the Federal Reserve (Fed) will hold interest rates at their current levels by the year-end.
According to the CME FedWatch tool, the odds of the Fed holding interest rates steady or above the current range of 3.50%-3.75% in the December meeting are 71.7%. Speculation that the Fed will not cut interest rates the entire year has been intensified by de-anchoring inflation expectations globally amid higher oil prices.
On Thursday, the US Dollar declined over 1% after comments from several global central banks signaled they would also favor tight monetary conditions amid accelerating inflation projections, which diminished fears of likely policy divergence between the Fed and other central banks.
Technical Analysis: USD/INR posts all-time highs near 93.60
USD/INR jumps to near 93.70 in the Asian session on Friday. The near-term bias is bullish as price extends above the rising 20-day Exponential Moving Average (EMA), confirming a short-term uptrend from the late-90 area. The recent surge has stretched the distance from the 20-day EMA, showing strong buying pressure rather than a gradual grind higher.
The 14-day Relative Strength Index (RSI) at 76 signals overbought momentum after a series of higher closes from mid-range readings, indicating trend strength but also a mature leg within this upswing.
Initial resistance sits near 93.80, where the latest impulsive advance faces scope for consolidation, followed by a higher barrier at 94.50 if buyers maintain control. On the downside, immediate support lies around 92.70, close to the prior breakout region and above the 20-day EMA near 92.30, where pullbacks would test trend integrity. A daily close below 92.30 would weaken the bullish structure and open the way toward secondary support at 91.80, while holding above it keeps focus on resistance retests.
(The technical analysis of this story was written with the help of an AI tool.)
Indian Rupee FAQs
The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.
The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference.
Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.
Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
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