USD/INR forecast: Here’s why the Indian rupee is in a freefall
The Indian rupee continued its strong slump against the US dollar this week, reaching a fresh all-time low. The USD/INR exchange rate rose for five consecutive days, reaching a high of 91.30. It has jumped by 9% from its lowest level in April last year and 26% from its lowest point in 2022.
Indian rupee dives amid capital outflows from foreigners
The Indian rupee has been in a strong downward trajectory, making it one of the worst-performing currencies in Asia. This performance happened even as the Indian economic growth remained strong.
Analysts believe that the sell-off is because of the rising dollar demand as foreigners sell Indian stocks. Data shows that foreign investors have sold over $2.7 billion in Indian shares this month. They dumped stocks worth over $19 billion last year.
One key reason for this is that relations between India and the United States have deteriorated during the Trump administration. The US president added a 50% tariff on all Indian goods, partly because of its ongoing business with Russia. Trump threatened to increase tariffs to 500% earlier this year.
At the same time, India has boosted its imports, leading to more demand for US dollars. Its monthly imports is worth between $63 billion and $76 billion.
The ongoing Indian rupee slide is a sign that the central bank’s intervention measures have not worked. Its interventions are primarily through currency sales, including by selling currencies worth over $30 billion between July and November.
The USD/INR exchange rate also jumped after Donald Trump announced a major change to the H1-B visa program. He raised the fees to $100,000, a move that affected India, a country with a 70% market share.
The pair has also slipped because of the dovish outlook of the Reserve Bank of India (RBI). The bank delivered four interest rate cuts in 2025, moving the benchmark rate from 6.75% in January to 5.25%.
Still, India’s bond yields continued rising despite the rate cuts. The ten-year yield rose from 6.12% in July last year to 6.66% today.
USD/INR forecast: technical analysis
The daily timeframe chart shows that the USD to INR exchange rate has rebounded in the past few months. It has jumped from a low of 83.76 in May last year to the current 91.36.
The pair has formed an ascending channel and is nearing the upper side. It has crossed the important resistance level at 91.065, its highest level in December.
The pair has remained above the 50-day and 100-day Exponential Moving Averages (EMA), which have provided it with substantial support.
At the same time, momentum indicators like the Relative Strength Index (RSI) and the MACD have continued rising this year. The RSI has moved to the overbought level of 73, while the Percentage Price Oscillator (PPO) has remained above the zero line.
Therefore, the most likely scenario is where the USD/INR exchange rate continues rising, with the next key resistance level to watch being at 95. A move below the support at 91 will invalidate the bullish outlook.
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