Pressure on the Rupee: INR Slides to Seven-Week Low Amid Triple Macro Threat

The Indian Rupee has dropped to a seven-week low close to 95.95 against the US dollar, knocked about by a mix of rising worldwide crude oil costs, ongoing foreign institutional capital exodus, and intense speculation around the Federal Reserve's monetary policy path. India's current account deficit is under increasing strain as Brent crude hovers around $107–$108 per barrel as a result of regional geopolitical tensions and shipping vulnerability. Since India gets more than 80% of its crude supplies from other countries, this rise in price might cause imported CPI inflation to return throughout the local economy.

A robust US dollar, backed by high US inflation statistics—including CPI at 3.4% and PPI at 5.4%—which have strengthened predictions of a strict Fed stance, adds further pressure on the currency. Yield differentials have moved in favor of US assets as US 10-year Treasury yields cross the 5.0% threshold, therefore driving Foreign Institutional Investors (FIIs) to continuous net equity sell-offs in Indian markets. This return of money to dollar safe havens has depleted domestic currency reserves and pushed USD/INR towards important technical support levels.

The Reserve Bank of India (RBI) has actively participated in the foreign exchange market by spot dollar sales, sell/buy swaps, and planned bond issuances totaling ₹1 trillion in response to the increased volatility. These actions seek to absorb extra rupee liquidity and stop the exchange rate's speculative overshooting. The FOMC's policy guidance and whether crude oil stays above the $100 per barrel level will shape the direction of USD/INR going forward.

Major resistance to watch -

R1-96 ,R2-96.67, R3-97

Support to watch -

S1-95.30, S2-94,S3-94.20