The Indian Rupee remains stable against its peers, though pressure from rising oil prices persists. Oil-dependent economies face selling pressure due to the 6% rise in global oil prices since Thursday, prompted by unrest in Iran, risking 1.9 million barrels per day of exports.<\/p>\n
Foreign Institutional Investors have sold Rs. 11,786.82 crore worth of Indian stocks in January amid US-India trade tensions. This selling keeps the Rupee under pressure. Meanwhile, US-India trade talks are scheduled for Tuesday, with hopes of positive outcomes possibly benefiting the Indian equity market.<\/p>\n
The upcoming release of India’s December Consumer Price Index is anticipated to show a growth increase of 1.5% Year-on-year. The USD\/INR pair is marginally lower around 90.40 as the US Dollar weakens due to legal actions against Jerome Powell. The US Dollar Index is slightly down at 99.10 after legal proceedings over testimony comments.<\/p>\n
US inflation data, out on Tuesday, is expected to reveal increased core inflation at 2.7% Year-on-year. The recent US jobs report indicated better-than-expected figures, such as a reduced Unemployment Rate of 4.4% and improved wage growth at 3.8%, enhancing the US Dollar’s appeal. USD\/INR trades slightly lower, but remains above its 20-Exponential Moving Average, supporting a positive short-term outlook.<\/p>\n
As we begin the week, it is useful to remember where we were this time last year. In January 2025, the Indian Rupee was under significant pressure, trading near 90.40 against the dollar due to a surge in oil prices and heavy selling from foreign investors. This historical context provides a stark contrast to the current market environment.<\/p>\n
Last year, global oil prices rallied almost 6% on fears of supply disruptions from Iran, putting major pressure on the Rupee. Today, in January 2026, the situation has calmed considerably, with Brent crude prices stabilizing around $78 per barrel, easing a key headwind for the currency. This stability reduces the immediate threat of import-driven inflation that we were concerned about in early 2025.<\/p>\n
Another major shift is in foreign fund flows. While we saw Foreign Institutional Investors pull out nearly \u20b911,800 crore in the first half of January 2025, the trend has completely reversed. Foreign Portfolio Investors (FPIs) have been strong net buyers, pouring over \u20b955,000 crore into Indian equities in December 2025 alone, reflecting renewed confidence in the market.<\/p>\n
On the US side, the dynamic has also changed. A year ago, the US Dollar Index was firm above 99.00, supported by strong wage growth of 3.8% and expectations of rising inflation. Now, with the latest US CPI data showing core inflation has cooled to 3.2%, the focus has shifted from rate hikes to potential rate cuts later this year, fundamentally altering the dollar’s outlook.<\/p>\n
Given these fundamental shifts, the trading strategy for USD\/INR should adapt from the bullish bias we saw in early 2025. With oil prices under control and strong FPI inflows providing support for the Rupee, rallies in the USD\/INR pair are likely to be met with selling pressure. We should now look to fade strength in the pair rather than buying dips, as the upward momentum from last year has clearly dissipated.<\/p>\n
The political drama from last year, such as the criminal charges against Fed Chair Powell, served as a reminder of how non-economic events can inject volatility. While that specific situation has passed, we should use options to protect against unexpected political or policy announcements. The current lower volatility environment may present a good opportunity to buy protection or structure trades that benefit from a sudden spike in price movement.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Rupee stable amid oil price surge, investor selling, and trade tension; inflation, jobs data may impact outlook.<\/p>\n","protected":false},"author":62,"featured_media":16966,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-38850","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\/38850","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=38850"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/38850\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16966"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=38850"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=38850"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=38850"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}