The Indian Rupee (INR) is stable as the US and India announce an interim trade framework to lower tariffs, reshaping economic ties. This framework aligns with an analysis by Goldman Sachs, which anticipates US tariffs on Indian imports being reduced to 20% from the previous 34%.<\/p>\n
Foreign portfolio inflows are being closely observed as nearly $900 million in Indian equities have been purchased in February, a recovery from January’s $4 billion outflow. Meanwhile, the US Dollar Index (DXY) fell, coinciding with expectations for unchanged US interest rates in March, with potential cuts anticipated later in the year.<\/p>\n
The USD\/INR pair shows bearish momentum, trading around 90.60, while the 14-day Relative Strength Index (RSI) indicates the market is neither overbought nor oversold. Support sits at the 50-day Exponential Moving Average at 90.48, with resistance at the nine-day EMA of 90.86.<\/p>\n
The Indian Rupee is influenced by external factors such as US Dollar value, foreign investment, and crude oil prices. The Reserve Bank of India intervenes in forex markets and adjusts interest rates to stabilise the exchange rate and maintain inflation at 4%. Macroeconomic factors like GDP growth, trade balance, and inflation also affect the Rupee’s value.<\/p>\n
Looking back at this time last year, we saw the Indian Rupee strengthen significantly following the announcement of an interim US-India trade framework. The positive sentiment was further boosted by a resumption of foreign inflows into Indian equities, which saw a reversal from the large outflows of January 2025. This created a clear opportunity for traders betting on a stronger Rupee.<\/p>\n
The current environment in early 2026, however, presents a more complicated picture. We are not seeing the same level of enthusiasm from foreign investors, with FPIs having pulled a net of nearly $1.5 billion from Indian equities so far this year, according to recent exchange data. Progress on turning last year\u2019s interim trade framework into a comprehensive deal has also been slower than anticipated, dampening some of the earlier optimism.<\/p>\n
Unlike last year when the US Dollar Index was weakening around the 97.60 mark, the dollar is showing more resilience today, trading consistently above 103. The Federal Reserve’s tone is also much different, as persistent inflation data has pushed expectations for interest rate cuts further into the second half of 2026, a stark contrast to the mid-2025 cuts anticipated a year ago. This fundamental strength in the US dollar is creating a headwind for the Rupee.<\/p>\n
Domestically, the Reserve Bank of India is maintaining a hawkish stance to anchor inflation, which has remained above its 4% target. While this provides some support for the INR, it is being offset by elevated crude oil prices, which are hovering around $85 a barrel, increasing India’s import bill. Last year, Brent crude was trading closer to the $75-$80 range, presenting less of a drag on the currency.<\/p>\n
Given these conflicting factors, traders should be wary of taking strong directional bets on the USD\/INR pair. The push from a hawkish RBI and the pull from a stronger US dollar and cautious foreign sentiment suggest a period of range-bound trading and potential volatility. We believe strategies that profit from this uncertainty, such as buying straddles or strangles, may be more appropriate than outright long or short positions in the coming weeks.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Indian Rupee steady as US-India trade deal cuts tariffs; foreign inflows rise, USD\/INR shows bearish trend.<\/p>\n","protected":false},"author":62,"featured_media":16964,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-41334","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/41334","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=41334"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/41334\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/16964"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=41334"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=41334"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=41334"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}