The Indian Rupee opened flat near Monday\u2019s low, around 90.80 per US Dollar on Tuesday. USD\/INR stayed broadly steady as importer demand supported the pair, while gains were limited by fears of Reserve Bank of India intervention.<\/p>\n
Foreign Institutional Investors remained net sellers in February, reducing holdings by Rs. 2,345.69 crore. On Monday, FIIs sold shares worth Rs. 972.13 crore.<\/p>\n
Markets awaited a second round of US-Iran talks in Geneva, with oil prices in focus if no agreement is reached. India\u2019s reliance on imported oil could weigh on the Rupee if energy costs rise.<\/p>\n
The US Dollar was mostly sideways after an extended US weekend, keeping USD\/INR range-bound. The US Dollar Index was flat near 97.15.<\/p>\n
Attention turned to Federal Reserve policy expectations, with CME FedWatch showing no rate cut priced in for March or April. US inflation eased in January, with headline and core rates at 2.4% and 2.5% year on year.<\/p>\n
This week\u2019s US data includes January FOMC minutes and preliminary Q4 GDP. In January, the Fed held rates at 3.50%\u20133.75% and kept a high threshold for further cuts.<\/p>\n
USD\/INR traded near 90.9035, just above the 20-day EMA at 90.8822. The 14-day RSI was 51.19; levels to watch include 90.00 on weakness and 91.25 on strength.<\/p>\n
We are seeing a familiar sideways pattern in the USD\/INR, reminiscent of the consolidation we observed around this time last year. The pair is currently caught between sustained dollar demand from importers and the market’s memory of the Reserve Bank of India’s past interventions. This creates a tight trading range, making directional bets risky in the immediate term.<\/p>\n
Looking back, the foreign investor sentiment we saw in early 2025 proved to be a year-long trend, with FIIs pulling out nearly \u20b91.8 lakh crore from Indian equities over the whole year. While we’ve seen a small net inflow of \u20b912,000 crore so far in 2026, traders should remain cautious as this reversal is still fragile. Any return to significant outflows could quickly push the rupee weaker.<\/p>\n
The concerns about oil prices from early 2025 also remain a critical factor for the rupee’s outlook. After the US-Iran talks last year failed to produce a lasting agreement, brent crude prices stayed elevated, averaging $94 per barrel in the final quarter of 2025. We must monitor geopolitical tensions closely, as any spike in energy costs will translate directly into pressure on the rupee.<\/p>\n
A key difference from early 2025 is the outlook for the US Federal Reserve’s monetary policy. Last year, the market was certain the Fed would hold rates steady, but today, expectations are for at least two rate cuts in 2026, with the first potentially coming in June. This dovish shift could cap the US dollar’s strength globally, providing some relief for the rupee.<\/p>\n
We must remember how the RBI aggressively defended the 92.00 level through the middle of 2025, using its foreign exchange reserves to curb volatility. Current reserves stand at a healthy $640 billion, giving the central bank significant power to intervene again if it sees excessive weakness in the rupee. This makes shorting the rupee a risky proposition beyond certain psychological levels.<\/p>\n
Given these opposing forces, derivative traders should consider strategies that profit from range-bound movement and low volatility. Selling out-of-the-money strangles on the USD\/INR pair could be a viable strategy for the coming weeks. This approach benefits from the expected stability as long as the pair remains within a predictable channel.<\/p>\n","protected":false},"excerpt":{"rendered":"
Rupee flat near 90.80, importer demand offsets RBI intervention fears; oil, FII selling, Fed outlook monitored.<\/p>\n","protected":false},"author":62,"featured_media":0,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-42050","post","type-post","status-publish","format-standard","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\/42050","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=42050"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/42050\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=42050"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=42050"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=42050"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}