USD/INR holds strong opening move driven by FIIs selling in India, rising oil prices
- The Indian Rupee gaps down to near 91.20 against the US Dollar after a holiday on Thursday.
- Rising oil prices due to US-Iran tensions have weighed on the Indian Rupee.
- Investors await India-US private sector PMI data for February.
The Indian Rupee (INR) holds its early gap down against the US Dollar (USD) during afternoon trading hours in India on Friday. The USD/INR pair trades higher to near 91.20 as the Indian Rupee weakens on rising Oil price and the absence of strong buying interest by foreign investors in the Indian stock market.
Oil prices have risen significantly following threats of United States (US) military action against Iran. According to a report from the Wall Street Journal (WSJ), President Donald Trump is weighing a limited military strike on Iran to pressure Tehran to agree to a nuclear deal.
Currencies from economies that rely on imports of oil to fulfill their energy needs tend to underperform in a high oil price environment.
There seems to be an absence of enthusiasm in Foreign Institutional Investors (FIIs) for increasing their stake in the Indian equity market despite the confirmation of a trade deal between the United States (US) and India. So far in February, FIIs have turned out to be net sellers and have pared their stake worth Rs. 1,076.63 crore, according to data from NSE, even as the trade deal was announced on February 2. On Thursday, overseas investors offloaded their stake worth Rs. 880.49 crore.
Meanwhile, a report from Reuters has shown that traders expect the Reserve Bank of India (RBI) to have intervened in the local and spot markets to support the Indian Rupee.
On the economic data front, India's HSBC Composite Purchasing Managers' Index (PMI) data for February has come in marginally lower at 59.3 from 59.4 in January. Activities in the manufacturing sector expanded at a faster pace, while the service sector output edged down.
In addition to weakness in the Indian Rupee, the upbeat US Dollar is also strengthening the pair. During the press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades firmly near the fresh four-week high of 98.00 posted on Thursday.
The US Dollar has been outperforming its peers since the release of the Federal Open Market Committee (FOMC) Minutes of the January policy meeting on Wednesday, which showed that officials are not in a hurry to cut interest rates as inflation remains persistently above the Federal Reserve’s (Fed) 2% target. In addition to slightly hawkish FOMC Minutes, risk-off market sentiment due to US-Iran tensions has also improved the US Dollar’s appeal.
During the day, investors will focus on the US preliminary Q4 Gross Domestic Product (GDP) and the US S&P Global PMI data for February.
The US Bureau of Economic Analysis (BEA) is expected to show that the economy rose at an annualized pace of 3%, slower than 4.4% growth seen in the third quarter of 2025.
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | INR | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.99% | 1.41% | 1.63% | 0.60% | 0.36% | 0.46% | 0.94% | |
| EUR | -0.99% | 0.43% | 0.66% | -0.36% | -0.63% | -0.43% | -0.05% | |
| GBP | -1.41% | -0.43% | -0.04% | -0.81% | -1.06% | -0.92% | -0.47% | |
| JPY | -1.63% | -0.66% | 0.04% | -1.01% | -1.23% | -0.64% | -0.64% | |
| CAD | -0.60% | 0.36% | 0.81% | 1.01% | -0.28% | 0.36% | 0.34% | |
| AUD | -0.36% | 0.63% | 1.06% | 1.23% | 0.28% | 0.63% | 0.59% | |
| INR | -0.46% | 0.43% | 0.92% | 0.64% | -0.36% | -0.63% | 0.46% | |
| CHF | -0.94% | 0.05% | 0.47% | 0.64% | -0.34% | -0.59% | -0.46% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Technical Analysis: USD/INR aims to hold above 20-day EMA
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USD/INR trades sharply higher at around 91.10 as of writing. Price holds above the 20-day Exponential Moving Average (EMA) at 90.89. The average has turned higher, indicating the pullback has eased.
The 14-day Relative Strength Index (RSI) at 54.99 (neutral) is rising through the midline, backing improving bullish momentum.
The short-term bias improves as the 20-day EMA’s slope recovers, helping to cap dips and support higher lows. On the upside, the price could advance toward the January 28 low of 91.66 if it continues to hold the 20-day EMA. Looking down, the February 3 low of 90.15 will act as key support.
(The technical analysis of this story was written with the help of an AI tool.)
(This story was corrected on February 20 at 11:04 GMT to say in the seventh paragraph that the US Dollar Index trades firmly near the fresh four-week high of 98.00, not three-week high)
Indian economy FAQs
The Indian economy has averaged a growth rate of 6.13% between 2006 and 2023, which makes it one of the fastest growing in the world. India’s high growth has attracted a lot of foreign investment. This includes Foreign Direct Investment (FDI) into physical projects and Foreign Indirect Investment (FII) by foreign funds into Indian financial markets. The greater the level of investment, the higher the demand for the Rupee (INR). Fluctuations in Dollar-demand from Indian importers also impact INR.
India has to import a great deal of its Oil and gasoline so the price of Oil can have a direct impact on the Rupee. Oil is mostly traded in US Dollars (USD) on international markets so if the price of Oil rises, aggregate demand for USD increases and Indian importers have to sell more Rupees to meet that demand, which is depreciative for the Rupee.
Inflation has a complex effect on the Rupee. Ultimately it indicates an increase in money supply which reduces the Rupee’s overall value. Yet if it rises above the Reserve Bank of India’s (RBI) 4% target, the RBI will raise interest rates to bring it down by reducing credit. Higher interest rates, especially real rates (the difference between interest rates and inflation) strengthen the Rupee. They make India a more profitable place for international investors to park their money. A fall in inflation can be supportive of the Rupee. At the same time lower interest rates can have a depreciatory effect on the Rupee.
India has run a trade deficit for most of its recent history, indicating its imports outweigh its exports. Since the majority of international trade takes place in US Dollars, there are times – due to seasonal demand or order glut – where the high volume of imports leads to significant US Dollar- demand. During these periods the Rupee can weaken as it is heavily sold to meet the demand for Dollars. When markets experience increased volatility, the demand for US Dollars can also shoot up with a similarly negative effect on the Rupee.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
