The Indian Rupee (INR) continued its decline against the US Dollar (USD) in Friday's opening trade, with the USD/INR pair reaching near 93.70, marking an all-time high for the currency pair [1]. This deterioration in the INR is attributed to consistent foreign outflows from the Indian stock market and elevated oil prices, which have been exacerbated by ongoing conflicts in the Middle East and a joint assault by the US and Israel against Iran [1]. These factors have created uncertainty over earnings expectations for the Nifty 50 in the fourth quarter of FY 2025-26, as companies face increased input costs that may impact profit margins or be passed on to consumers, resulting in deviations between projected and actual earnings [1].
Foreign Institutional Investors (FIIs) have remained net sellers throughout March, offloading their stake worth Rs. 81,262.5 crore from the Indian equity market [1]. This persistent selling pressure has contributed to the rupee's weakness and heightened volatility in Indian financial markets. Meanwhile, the US Dollar Index (DXY) recovered from Thursday's sell-off, trading almost 0.3% higher near 99.45 during press time, after dropping over 1% the previous day due to global central banks signaling a preference for tight monetary conditions amid accelerating inflation projections [1].
Market speculation, as indicated by the CME FedWatch tool, suggests a 71.7% probability that the Federal Reserve will hold interest rates steady or above the current range of 3.50%-3.75% in its December meeting, with expectations intensifying that the Fed will not cut rates throughout the year due to de-anchoring inflation expectations globally and higher oil prices [1].
From a technical perspective, USD/INR's surge above the rising 20-day Exponential Moving Average (EMA) confirms a short-term bullish trend, with the 14-day Relative Strength Index (RSI) at 76 signaling overbought momentum and strong buying pressure [1]. Initial resistance is noted near 93.80, with a higher barrier at 94.50 if buyers maintain control, while the recent advance suggests scope for consolidation [1].
CONCLUSION
The USD/INR pair's record high reflects significant market stress driven by foreign outflows and rising oil prices, with technical indicators pointing to strong but potentially overextended buying momentum. Persistent FII selling and expectations of steady US interest rates are likely to keep the rupee under pressure in the near term. Market participants should monitor resistance levels and global developments for further direction.