The Indian Rupee is currently weak, trading at around 88.95 against the US Dollar. In October, Rs. 2,346.89 crores left the Indian equity market, which is less than in previous months. Even though the US Dollar Index has reached a three-month high of 99.95, the USD/INR isn’t rising much. Foreign Institutional Investors are slowing down their selling activities in India.

Reserve Bank Of India And Market Sentiment

The Reserve Bank of India (RBI) might step in as the USD/INR nears its peak of 89.12. Ongoing trade discussions between the US and India haven’t led to an agreement, affecting market feelings. The US Dollar’s strength comes from uncertainty about further interest rate cuts by the Federal Reserve. Chair Jerome Powell’s recent statements suggest that a rate cut in December is uncertain. The probability of a cut is now 69.3%, down from 91.7%. Technical data shows the USD/INR close to 88.95, facing resistance at its peak of 89.12. Tariffs are a major topic in global trade talks, with differing opinions on their effects. Donald Trump aims to use tariffs to strengthen the US economy, focusing on trade with Mexico, China, and Canada. This supports his strategy for the 2024 US presidential election.

Dollar Strength And Trading Strategy

The Indian Rupee is surprisingly strong, staying below 89.00 while the US Dollar Index is at a three-month high. Although the trend for USD/INR is upward, there’s significant resistance preventing a new peak. This scenario is shaped by the aggressive stance of the US Federal Reserve and reduced foreign investment outflows from India. In the coming weeks, we will closely monitor the RBI’s potential intervention. The USD/INR is nearing its all-time high of 89.12, a level the RBI is likely to protect to stop significant depreciation. India’s foreign exchange reserves have remained above $600 billion throughout 2023 and 2024; this gives the RBI enough resources to limit the pair’s upswing, making a breakout difficult. Meanwhile, the US Dollar is strong because market confidence in a December 2025 rate cut from the Federal Reserve is waning. The likelihood of a cut has fallen from over 90% to below 70% in just a week. We’ve seen this trend throughout 2023-2024 as inflation remains persistent. This sustained strength in the dollar creates a solid support level for the USD/INR pair, preventing major declines. This situation leads to a classic range-bound scenario, with strong resistance around 89.12 and firm support below. For those trading derivatives, selling call options with strike prices at or just above the all-time high could be a good strategy for collecting premiums. Alternatively, the tension between opposing forces could cause sharp movements, making volatility strategies like buying straddles attractive. It’s important to note that foreign investors have sold Indian stocks for four consecutive months, though the pace slowed in October 2025. This, along with no progress on a US-India trade deal, creates a cautious atmosphere. While the slowed selling helps the Rupee for now, a return to the heavy outflows seen from July to September 2025 could quickly challenge the RBI’s strength at its historic high. Create your live VT Markets account and start trading now.

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