The Indian Rupee (INR) fell to record levels against the US Dollar (USD) on Wednesday. The USD/INR pair rises to near 92.00 as the Indian Rupee faces intense selling pressure due to continued inflow of foreign funds from the Indian stock market and risk-off market mood amid US-European Union (EU) tensions over Greenland.
Foreign Institutional Investors (FIIs) are constantly offloading their stake in the Indian stock market due to the lack of announcement of a trade deal between the US and India, keeping the demand for the US dollar going among Indian importers. So far in January, FIIs have remained net sellers in 12 out of 13 trading days and have offloaded their stake worth Rs. 32,253.55 crores.
The constant inflow of external funds from the Indian stock market is greatly impacting the Indian stock exchanges. Nifty50 fell nearly 4.3% to close to 25,250 from its high of 26,373 recorded on January 5.
Trade tensions between the US and India resulted from Washington imposing punitive 25% tariffs in mid-2025 on imports from New Delhi for purchasing oil from Russia.
Going forward, the main impetus for the Indian rupee will be the announcement of the fiscal budget for the fiscal year 2026-27 on February 1.
The table below shows the percentage change in the Indian Rupee (INR) against the major currencies listed today. The Indian rupee was the weakest against the Australian dollar.
| US dollars | euro | GBP | JPY | Canadian | Australian dollar | Indian rupee | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| US dollars | -0.03% | -0.04% | -0.03% | -0.01% | -0.16% | 0.52% | 0.07% | |
| euro | 0.03% | -0.01% | 0.00% | 0.02% | -0.13% | 0.54% | 0.11% | |
| GBP | 0.04% | 0.01% | 0.00% | 0.04% | -0.12% | 0.57% | 0.11% | |
| JPY | 0.03% | 0.00% | 0.00% | 0.03% | -0.12% | 0.59% | 0.10% | |
| Canadian | 0.00% | -0.02% | -0.04% | -0.03% | -0.15% | 0.55% | 0.07% | |
| Australian dollar | 0.16% | 0.13% | 0.12% | 0.12% | 0.15% | 0.70% | 0.23% | |
| Indian rupee | -0.52% | -0.54% | -0.57% | -0.59% | -0.55% | -0.70% | -0.44% | |
| Swiss franc | -0.07% | -0.11% | -0.11% | -0.10% | -0.07% | -0.23% | 0.44% |
The heat map shows the percentage changes in major currencies versus each other. The base currency is chosen from the left column, while the counter currency is chosen from the top row. For example, if you select the Indian Rupee from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent INR (base)/USD (quote).
Daily summary of market drivers: The next Fed chair will be announced early next week
- The USD/INR rally is also driven by a slight recovery in the US dollar. At the time of writing, the US Dollar Index (DXY), which tracks the value of the dollar against six major currencies, is trading at a higher level near 98.65.
- However, the broader outlook for the US dollar remains weak amid disputes between the world’s largest economies over Greenland’s future. US markets fell nearly 2% on Tuesday after a long weekend.
- Relations between the United States and the European Union were significantly affected as President Donald Trump imposed 10% tariffs on several members of the Old Continent and the United Kingdom in response to opposition to Washington’s plans to retain Greenland’s entitlement.
- In response, many countries around the world have criticized Trump’s tariff tactics, warning that they could affect world peace. French President Emmanuel Macron strongly condemned Trump’s use of tariffs to blackmail the continent into stopping opposition to Washington’s purchase of Greenland, in a speech to the World Economic Forum in Davos on Tuesday.
- “The endless accumulation of new tariffs is unacceptable, especially when it is used as leverage against territorial sovereignty,” Macron was quoted as saying by the New York Times.
- On the other hand, market experts warned that US assets may witness further weakness, as tense relations between the United States and the European Union may affect US exports, given that US relations with other major economies, such as India, China and Russia, are already fragile.
- On the domestic front, US Treasury Secretary Scott Besent announced on Tuesday at the World Economic Forum that the White House may announce the name of the new Fed chair as early as next week, and there are four candidates for the position at the moment.
Technical Analysis: The USD/INR pair rises to 92.00
The USD/INR pair is rising to near 92. The 20-day Exponential Moving Average (EMA) is rising at 90.60 and supporting the advance, with the price holding above this dynamic base.
The 14-day Relative Strength Index (RSI) at 73.15 (overbought) confirms extended momentum that may limit immediate follow-through. Initial support lies at the rising EMA, and stability above this measure should help stabilize the trend in the short term.
With the moving average sloping higher, the path of least resistance remains to the upside, and declines toward the average will be treated as a retest of support. A moderation of the RSI below 70 would indicate a reset in healthy momentum without undermining the bullish bias. In general, the setup favors holding while the pair stabilizes above the bullish EMA; A clear break below this measure would open the way for a deeper decline.
(The technical analysis for this story was written with the help of an artificial intelligence tool.)
Frequently asked questions about Indian economy
The Indian economy has averaged a growth rate of 6.13% between 2006 and 2023, making it one of the fastest growing economies in the world. India’s high growth has attracted a lot of foreign investment. This includes foreign direct investment (FDI) in physical projects and foreign indirect investment (FII) by foreign funds in Indian financial markets. The higher the investment level, the greater the demand for the rupee (INR). Fluctuations in dollar demand from Indian importers also affect the Indian rupee.
India has to import a significant amount of its oil and gasoline needs, so the oil price can have a direct impact on the rupee. Oil is mostly traded in US dollars (USD) in international markets, so if the price of oil rises, the overall demand for USD increases and Indian importers have to sell more rupees to meet this demand, which leads to a depreciation of the rupee.
Inflation has a complex impact on the rupee. It ultimately indicates an increase in money supply which reduces the overall value of the rupee. However, if the interest rate rises above the RBI’s target level of 4%, the bank will raise interest rates to bring it down by reducing credit. Rising interest rates, especially real rates (the difference between interest rates and inflation) boost the rupee. It makes India a more profitable place for international investors to put their money. Lower inflation could be supportive for the rupee. Meanwhile, low interest rates could have a negative impact on the rupee.
India has run a trade deficit for most of its modern history, suggesting that its imports exceed its exports. Since the majority of international trade is conducted in US dollars, there are times – due to seasonal demand or abundant demand – when a high volume of imports creates a large demand for US dollars. During these periods the rupee can weaken as it is sold heavily to meet the demand for dollars. When markets witness increased volatility, demand for the US dollar can also rise with a corresponding negative impact on the rupee.
