The Indian Rupee fell after opening flat against the US Dollar at the start of the Reserve Bank of India policy week. USD/INR rose to about 92.85, with firmer oil prices weighing on the Rupee.
WTI traded near $102 during afternoon hours in India after renewed threats against Iranian infrastructure were reported. Higher oil prices tend to pressure currencies in economies such as India that import large amounts of energy.
Foreign fund outflows from Indian equities continued to add pressure. In the first two trading days of April, Foreign Institutional Investors sold Rs. 18,262.28 crore, and they were net sellers on all trading days in March.
Attention this week is on the RBI policy decision on Wednesday, with expectations for rates to stay unchanged. Markets are also watching US ISM Services PMI for March at 14:00 GMT, forecast at 55.0 versus 56.1 in February.
In technical terms, USD/INR resistance is near the 20-day EMA around 93.00, then 93.66, with an all-time high at 95.22 above. Support is seen at 92.35, then 91.35, while the 14-day RSI moved into the 40.00–60.00 zone.
Given the high oil prices and continued foreign outflows, we should anticipate further weakness in the Indian Rupee. The fundamental picture supports a rising USD/INR, so positioning for this trend is the primary strategy. Derivative traders should consider buying USD/INR futures or call options to capitalize on the upward momentum toward the 93.00 and 93.66 resistance levels.
The surge in WTI crude to $102 a barrel is a major threat to the Rupee, as it inflates India’s import bill. Historically, we have seen oil prices cross the $100 mark during significant geopolitical events, like the conflict in Ukraine in 2022, which immediately widened India’s current account deficit. This situation makes a compelling case for a weaker Rupee in the weeks ahead.
The consistent selling by Foreign Institutional Investors, with over Rs. 18,200 crore pulled out in early April, is putting direct pressure on the currency. Looking back from our viewpoint in 2025, we recall how periods of sustained outflows, like the one seen in January 2024 when FPIs sold over $3 billion in equities, consistently led to Rupee depreciation. This pattern appears to be repeating, reinforcing the bearish outlook for the INR.
This week’s RBI monetary policy announcement on Wednesday is a key event that will likely inject volatility into the market. With inflation concerns rising, any hawkish commentary from the central bank could cause sharp, unpredictable moves. We should consider strategies like long straddles to profit from a potential spike in volatility, regardless of the direction.
For traders looking at specific entry points, a decisive break above the 20-day EMA near 93.00 would be a strong signal to add to long positions. A move past the 93.66 high would confirm the bullish trend is reasserting itself, opening the path toward the all-time high. The immediate support to watch is 92.35, but the overall pressure remains on the upside for the dollar.
Importers with future US dollar payments should see the current environment as a critical time to hedge their currency risk. Buying USD/INR forward contracts or call options can lock in a rate and protect profit margins from further Rupee depreciation. The cost of not hedging in such a volatile, high-oil-price environment could be significant.
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