The Indian rupee (INR) experienced a deeper decline against the US dollar (USD) on Friday, which was a holiday. The USD/INR exchange rate has climbed to around 93.90 as the rupee faces substantial pressure. This is largely due to ongoing foreign capital outflows from India’s stock market, high oil prices tied to conflicts in the Middle East, and a continuous strengthening of the US dollar.
Foreign Investment Trends in Indian Markets
Foreign investors have been persistently selling off stocks in the Indian market as rising oil prices, driven by the US-Israeli actions towards Iran, have raised uncertainties regarding earnings forecasts for Nifty 50 companies for the fourth quarter of 2025-26.
Theoretically speaking, corporations are managing rising input costs by either absorbing the costs, thus affecting their profit margins, or transferring them to consumers, creating a gap between anticipated earnings and the actual figures.
In March alone, foreign institutional investors (FIIs) have been net sellers each trading day, with shares sold amounting to Rs 100 crore or about 81.26 billion.
Federal Reserve’s Interest Rate Outlook
As of this moment, the US Dollar Index (DXY), which measures the dollar against six major currencies, was nearing 99.45, reflecting a rise of about 0.3%. It has recovered from a low of 99.00 on Thursday, fueled by increasing expectations that the Federal Reserve will maintain interest rates at their current levels for the rest of the year.
Based on the CME FedWatch tool, there’s a 71.7% likelihood that the Fed will keep interest rates steady or above their current range of 3.50-3.75% during its December meeting. With inflation expectations fluctuating globally due to soaring oil prices, speculation is mounting that the Federal Reserve may not cut rates this year.
The dollar saw a decrease of more than 1% on Thursday after various global central banks hinted at supporting monetary tightening amidst rising inflation expectations, easing worries that there would be a discrepancy in policies between the Fed and other central banks.
Technical Insights: USD/INR Nearing 94.00
The USD/INR rate has approached 93.90 as of Friday. The short-term outlook appears bullish, given that the rate sits above the upward-trending 20-day exponential moving average (EMA), confirming a near-term trend following lows in the $90s. The recent surge has created greater distance from the 20-day EMA, suggesting robust buying interest rather than a simple upward movement.
The 14-day Relative Strength Index (RSI) stands at 78, indicating overbought conditions following a series of strong gains, which reflects both trend strength and a mature stage within this bull market.
Initial resistance looks to be around the 94.00 level, while the recent impulsive movement may require some consolidation—though there’s potential for a stronger resistance at 94.50 if buyers continue to dominate the market. On the downside, immediate support is near the March 13 peak at 93.00, close to previous breakout areas and above the 20-day EMA near 92.35, where a pullback could challenge the trend’s validity. A daily close beneath 92.30 could weaken the bullish outlook, leading to further support around 91.80, whereas a break above 92.80 would refocus on resistance retests.
