The Indian Rupee traded flat near Monday’s low. USD/INR was around 90.80 on Tuesday afternoon in India. Importers’ demand for US Dollars pressured the Rupee. At the same time, fears of Reserve Bank of India (RBI) intervention limited the downside.
Foreign Institutional Investors (FIIs) were net sellers in February. They cut holdings by Rs. 2,345.69 crore. On Monday, FIIs sold Rs. 972.13 crore in shares.
Markets also watched a second round of US-Iran talks in Geneva. Traders focused on what the talks could mean for oil prices. Higher oil prices can hurt the Rupee because India imports most of its oil.
The US Dollar was steady ahead of the US market open after a long weekend. The US Dollar Index (DXY) was near 97.15.
Traders expected no Federal Reserve rate cut in March or April, based on the CME FedWatch tool. US inflation eased in January. Headline inflation was 2.4% year on year, and core inflation was 2.5%.
Key US releases this week include the FOMC minutes and preliminary Q4 GDP data. The Fed kept rates at 3.50%–3.75% in January.
USD/INR was near 90.9035, just above the 20-day EMA at 90.8822. The 14-day RSI was 51.19. Key levels were 90.00 on the downside and 91.25 on the upside.
USD/INR remains stuck in a familiar range, similar to what we saw around this time in 2025. Strong dollar demand from importers is supporting the pair. However, gains are limited by the ongoing risk of RBI intervention. India’s foreign exchange reserves hit a record $710 billion in January 2026, giving the RBI plenty of room to curb any sharp Rupee weakness.
The Rupee outlook looks better than last year, when FIIs were net sellers. In the last quarter of 2025, flows flipped. FIIs became net buyers and put more than $5 billion into Indian stocks. This renewed foreign demand supports the INR.
Oil remains important, but the situation is calmer than during the US-Iran talks in 2025. Brent crude has traded in a tight $85–$90 per barrel range. That reduces the risk of a sudden jump in import costs that could pressure the Rupee. More stable energy prices also help reduce currency volatility.
On the US side, conditions have changed since early 2025, when the Fed was holding rates steady. The Fed funds rate is now higher, at 4.25%–4.50%. Even so, markets expect a pause. CME FedWatch shows less than a 20% chance of another hike in March. With no clear signal from the Fed, USD/INR is more likely to stay range-bound.
For derivatives traders, these forces point to continued consolidation in the coming weeks. One-month implied volatility for USD/INR has fallen to a multi-year low of 3.8%. That makes volatility-selling strategies, such as a short strangle, look more attractive. We can consider this approach to benefit from a market that is likely to stay calm.
here to set up a live account on VT Markets now
