The Indian rupee continued its downward trajectory on Wednesday, slipping to an all-time low against the US dollar. In early trading, the rupee depreciated by 52 paise, trading at 91.50 per dollar. This follows a weaker close on Tuesday, when the currency ended at 90.98, its lowest since December 16, signaling ongoing pressure on the national currency.
Market analysts attribute the rupee’s decline to a mix of domestic and global factors. Strong dollar demand from metal importers, coupled with persistent foreign portfolio investor (FPI) outflows and domestic equity market selling, has intensified the downward pressure. Additionally, rising crude oil prices, which make India’s oil imports more expensive, are contributing to the weakening trend.
Global Factors and Market Sentiments
Geopolitical tensions and volatility in the dollar index are further fueling uncertainty. The dollar index experienced significant swings, settling at 98.37 on Tuesday, down 0.50%. This decline occurred amid rising trade war concerns between the US and European nations, with threats of tariffs escalating trade tensions and market instability.
US equity markets saw heavy selling, although gains in 10-year US Treasury yields provided some dollar support. Experts predict continued volatility in the dollar index, with a possible trading range of 97.70 to 100.80 amid ongoing geopolitical and economic uncertainties.
Crude Oil and Foreign Investment Impact
Crude oil prices remained stable near $64 a barrel, but geopolitical risks kept energy markets cautious. Higher energy costs are expected to add to India’s import bill, exerting further pressure on the rupee.
Foreign investors have been reducing their exposure to Indian equities, seeking safer assets amid global tensions, leading to increased dollar outflows. Manoj Kumar Jain, an market analyst, highlighted that the domestic sell-off and FPI outflows are primary drivers of the rupee’s weakness.
Outlook and Technical Analysis
Jain suggests that the rupee may remain volatile in the near term, with the USD-INR pair projected to trade between 89.85 and 92.00. The proposed India–EU free trade agreement might offer some support at lower levels.
From a technical standpoint, the January 28 futures contract for USD-INR has shown resilience, settling slightly higher at 91.0050 on Tuesday. The pair remains above its support level of 90.42, with bullish indicators like RSI above 60 and a positive MACD crossover hinting at sustained upward momentum.
Support levels are identified between 90.74 and 90.45, while resistance is expected around 91.35 to 91.55. Overall, experts believe the rupee’s decline is likely to continue amidst global and domestic economic uncertainties.
