USD vs INR: The Indian rupee slipped past the 90 per US dollar mark on Friday, weighed down by sustained dollar demand and persistent foreign investor outflows.
During the morning session, the currency traded in a tight range and briefly appreciated by 6 paise to 89.92. However, traders noted that thin liquidity magnified normal demand–supply mismatches, keeping the rupee tilted toward depreciation. The rupee finally settled 22 paise down at 90.20.
On Thursday, January 1, the rupee had slipped by 10 paise, ending the session at 89.98 against the US dollar.
Where is rupee headed in 2026?
The Indian rupee depreciated against the US dollar amid the absence of key triggers, leaving markets without a clear direction.
Market participants noted that the dollar–rupee pair is likely to trade within a narrow range in the near term, as the Reserve Bank of India is believed to be actively defending the 90 level.
Continued dollar selling by state-owned banks has lent support to the rupee, strengthening expectations that the central bank is seeking to curb any sustained move past this key psychological threshold.
Namrata Mittal, CFA, Chief Economist, SBI Mutual Fund, said that the rupee’s recent weakness, despite low inflation, has made the REER competitive. She expects improvement in the balance of payments in FY27. Furthermore, the high gold import bill, driven by 60% higher prices, is offset by weak oil prices.
“While the non-oil, non-gold import has widened due to economic recovery and Chinese export competition, strong double-digit growth in net services exports helps contain the current account deficit below 1% of GDP in FY26 and FY27. Capital inflows should improve in FY27, supported by potential inclusion in yet another global bond index and an expectation of resumption of FPI equity flows, she opined.
SBI MF’s chief economist expects the rupee to weaken only ~2% in FY27 (to 92/USD). A trade deal could even trigger modest appreciation, she added. “Overall, currency fundamentals remain stable, aided by contained CAD, resilient services exports, and hope of improving capital flows.”
Meanwhile, Prateek Agrawal, MD & CEO, Motilal Oswal AMC, sees a bright spot for Indian Inc on rupee fall. The depreciation of INR may support margins of India Inc. as export-oriented businesses make extra margins since Indian costs get lower in USD. “Moreover, with most items priced in USD on a landed cost basis, a currency depreciation may also increase the attractiveness of most domestic businesses. Imported items may become more expensive and which could lead to demand reduction, leading to a more balanced global trade,” he said.
According to Ponmudi R, CEO of Enrich Money, USD/INR is trading steadily around 89.90–90.00, holding above the 20-day EMA near 89.82 and the long-term rising trendline. The pair continues to form higher highs and higher lows, with RBI interventions helping to smooth volatility and cap sharp depreciation in the rupee, he added.
“After testing levels above 91 toward the end of 2025, the pair has stabilised amid a softer US dollar. For 2026, expectations remain mixed: consensus forecasts point to a broad 90–91 range, while sustained outflows could push the pair toward 90.80–93. Conversely, continued RBI support and easing external pressures could keep USD/INR range-bound near 89–90. Immediate support is seen at 89.50–89.00; a decisive break below could open downside toward 88.50. Resistance remains at 90.50–91.00. Overall, the structure remains neutral to mildly bullish for USD,” Ponmudi said.
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.
