USD/INR remains firm amid weak FIIs inflow in Indian equity market

The Indian Rupee (INR) trades firmly against the US Dollar (USD) in the late trading hours in India on Friday. The USD/INR pair holds onto gains near 91.30 as the Indian stock market struggles to attract foreign investment.

According to data from the NSE, there seems to be no consistent inflows of overseas funds into the Indian equity market despite the announcement of a trade deal between the United States (US) and India in early February. So far this month, Foreign Institutional Investors (FIIs) have bought shares worth Rs. 895.58 crore, which represents pennies against the outflow seen in the last seven months.

On February 2, both India and the US acknowledged the trade deal announcement by President Donald Trump in which Washington agreed to cut tariffs on imports from New Delhi to 18% from 50% (which included 25% punitive tariffs).

Meanwhile, Indian Trade Minister Piyush Goyal has signaled that there could be some revisions in the trade deal with the US to get "best possible opportunities", following the Supreme Court's (SC) ruling against President Donald Trump's tariff policy, CNN reported.

Also, the Indian currency is failing to capitalize on signs of easing tensions between the US and Iran. Oman's Foreign Minister, Badr al-Busaidi, said in early trade that talks between the two nations on nuclear issues have made "significant progress,” and they will resume next week in Vienna.

It seems that the absence of a meaningful impact of positive US-Iran talks on the oil price has failed to support the Indian Rupee. As of writing, WTI oil price trades 0.3% lower at near $65.25. The Indian currency is highly sensitive to changes in oil prices, given that the Indian economy relies heavily on oil imports to meet its energy needs.

On the domestic front, the Q4 Gross Domestic Product (GDP) data arrives at 7.8% Year-on-Year (YoY), higher than estimates of 7.2%, but lower than the previous reading of 8.2%.

In the Asian session, the US Dollar trades marginally and is expected to end the week broadly sideways after the whole tariff tantrum. During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, ticks lower to near 97.70.

This week, US President Trump announced 10% global tariffs, and US Trade Representative Jamieson Greer said that Washington could raise these tariffs to 15% or above on some nations. The White House called for global levies to offset the impact of the SC's ruling against Trump’s tariff policy, which came on February 20.

On the monetary policy front, traders remain confident that the Federal Reserve (Fed) will leave interest rates unchanged in its policy meetings in March and April, according to the CME FedWatch tool. Market speculation for the Fed to avoid any monetary policy adjustment in the next two meetings has been prompted by inflation remaining above the central bank’s 2% target for a long period.

On Thursday, Chicago Fed President Austan Goolsbee signaled support for several interest rate cuts this year, but cautioned against front-loading them as inflation is still above the 2% target. “Rates can come down, but don't want to front-load before inflation eases,” Goolsbee said in an interview with Fox News.

Technical Analysis: USD/INR clings to gains near 91.30

USD/INR trades firmly near 91.20 as of writing. The pair holds a mild bullish bias as it stabilizes above the 20-day Exponential Moving Average, which has flattened and now tracks just below spot.

The 14-day Relative Strength Index (RSI) approaches 60.00, signaling positive but moderate momentum rather than an extended uptrend.

Immediate support emerges at the 20-day EMA near 90.94, with a break below exposing the recent reaction low at 90.58 and then the February 3 low at 90.15 as deeper support. On the topside, initial resistance stands at the January 22 low of 91.35, followed by the January 28 low of 91.66.

(The technical analysis of this story was written with the help of an AI tool.)