The Indian Rupee weakened against the US Dollar on Monday afternoon in India, giving back earlier gains. USD/INR ticked up toward 91.00, even as the US Dollar stayed under pressure.
The US Dollar Index (DXY) fell 0.21% to around 97.45, after recovering part of its earlier drop. The move followed a US Supreme Court ruling that President Donald Trump exceeded his authority under the International Emergency Economic Powers Act (IEEPA) when imposing broad tariffs.
Supreme Court Ruling And Tariff Fallout
After the ruling, Trump said he was “ashamed of certain members of the court” and announced 15% global tariffs.
The Dollar also weakened after soft US data. Q4 GDP rose at a 1.4% annualised pace, below the 3% estimate and down from the prior 4.4%. The S&P Global Composite PMI also slipped to 52.3 from 53.0.
The ruling and the new 15% tariff rate—lower than the 18% discussed in US-India talks—could help Indian exporters. A planned visit by Indian trade negotiators to the US was delayed for an unknown period.
Foreign Institutional Investors sold Rs. 2,011.24 crore of Indian equities in February and sold Rs. 934.61 crore on Friday. USD/INR stayed above the 20-day EMA at 90.888, while the 14-day RSI remained in the 40.00–60.00 range.
In early 2025, USD/INR moved sideways around 91.00, driven by uncertainty over US trade policy and a weaker Dollar. That period included Supreme Court rulings limiting presidential tariffs and softer economic data. Now, in late February 2026, the backdrop is very different.
Over the past year, the Dollar has strengthened sharply as the Federal Reserve kept fighting persistent inflation. The Fed raised its key rate to 5.75% earlier this month, and US Q4 2025 GDP growth came in at a solid 2.8%. As a result, USD/INR is trading closer to 93.50, well above earlier pivot levels.
India Inflows And Rbi Volatility Management
India, however, remains resilient. Strong foreign portfolio investor (FPI) inflows contrast with the net selling seen in February 2025. FPIs have invested more than $3 billion into Indian markets this month, helping support the Rupee.
The Reserve Bank of India is also managing volatility, aiming to prevent a disorderly fall in the Rupee despite broad Dollar strength.
This tug-of-war between a hawkish Fed and strong Indian inflows makes clear one-way bets risky. Traders may prefer strategies that work in mixed conditions. For example, buying USD/INR call options can provide upside exposure with limited downside. Selling out-of-the-money put options may also help collect premium, based on the view that RBI support could limit sharp drops.
With USD/INR holding above its key 20- and 50-day moving averages, the technical trend is still upward, but headwinds are likely. Implied volatility has risen, showing higher uncertainty and making options more expensive. This setup favors strategies that either cap risk clearly or take advantage of higher premiums, while keeping in mind the strong but conflicting market forces.
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