The Indian Rupee gained sharply against the US Dollar as the USD\/INR pair fell over 1%, nearing 90.00, from a peak of 91.56 due to the Reserve Bank of India’s intervention in spot and NDF markets. State-run banks aggressively sold US Dollars, likely on behalf of the RBI, as the Rupee remained the poorest-performing Asian currency, having dropped almost 6.45% this year.<\/p>\n
Foreign fund outflows from the Indian stock market persisted amid a lack of a trade announcement between the US and India. The ongoing trade stalemate with the US increased demand for Dollars by Indian importers, further weakening the Rupee.<\/p>\n
RBI Governor Sanjay Malhotra stated that interest rates would remain low for a longer term, noting a surprising GDP figure led to improved forecasting by the central bank. Foreign Institutional Investors have been net sellers in seven out of 11 months, with significant equity sell-offs in December.<\/p>\n
In the US, the Dollar Index (DXY) rose 0.17% amid weak data raising economic concerns. While Nonfarm Payrolls and PMI data showed weakness, experts see little impact on Federal Reserve’s policy expectations.<\/p>\n
Technical analysis reveals USD\/INR holds key at the 20-day EMA, keeping a bullish bias. The pair trades at 90.5370, maintaining support above this level to preserve an upward trend.<\/p>\n
The Reserve Bank of India\u2019s heavy intervention has slammed the USD\/INR pair back towards the 90.00 level, creating a significant dip. We see this not as a reversal, but as a potential opportunity to buy into the prevailing uptrend at a more favorable price. The underlying factors that pushed the pair to its all-time high of 91.56 have not disappeared.<\/p>\n
Fundamentally, the rupee remains under pressure due to persistent capital outflows and the RBI\u2019s own dovish stance. With Foreign Institutional Investors pulling out nearly Rs. 24,000 crore from Indian equities this month, and Governor Malhotra signaling low rates for longer, the incentive to hold rupees is diminishing. Looking back at similar heavy interventions in 2022, we saw that the RBI could slow the rupee’s fall but couldn’t reverse the trend against strong global dollar dynamics.<\/p>\n
On the other side of the trade, the US dollar remains firm despite some weak domestic data. The market is largely looking past the rise in the unemployment rate to 4.6% and the soft PMI figures, attributing the weakness to a recent government shutdown. According to the CME FedWatch tool, expectations for a Federal Reserve rate cut in January 2026 are still incredibly low, underpinning dollar strength.<\/p>\n
The immediate focus for us must be on the upcoming US Consumer Price Index (CPI) data. A high inflation reading would reinforce the Fed’s hawkish stance, likely sending the dollar higher and erasing the impact of the RBI’s intervention. We are seeing analysts forecast November’s annual inflation rate to come in around a sticky 3.4%, which is well above the Fed’s target.<\/p>\n
Given this context, we should look to use this pullback to initiate long positions in USD\/INR. Buying call options to cap risk or entering long futures contracts near the current 90.00-90.15 support zone appears to be the prudent strategy for the coming weeks. The technical picture supports this, as the pair remains above its crucial 20-day moving average, suggesting the primary bullish trend is still intact.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Indian Rupee surged as RBI intervened; USD\/INR fell, but bearish risks persist amid trade uncertainties.<\/p>\n","protected":false},"author":62,"featured_media":16965,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-37096","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-ca\/wp-json\/wp\/v2\/posts\/37096","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=37096"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/37096\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16965"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=37096"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=37096"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=37096"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}