USD/INR hits record highs amid consistent FIIs outflow, risk-off mood
By Sagar Dua
Date Published: 21 Jan 2026 | Date Modified: 21 Jan 2026
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The Indian Rupee (INR) plunges to record lows against the US Dollar (USD) on Wednesday.
- The Indian Rupee falls to record lows at 92.00 against the US Dollar.
- Consistent outflow of foreign funds from the Indian stock market has weakened the Indian Rupee.
- US-EU disputes over Greenland have weighed on the appeal of US assets.
The Indian Rupee (INR) plunges to record lows against the US Dollar (USD) on Wednesday. The USD/INR rallies to near 92.00 as the Indian Rupee faces intense selling pressure due to consistent outflow of foreign funds from the Indian stock market and the risk-off market mood amid tensions between the United States (US) and the European Union (EU) over Greenland.
Foreign Institutional Investors (FIIs) are consistently dumping their stake in the Indian stock market due to the absence of a trade deal announcement between the US and India, keeping demand for US Dollars sustained among Indian importers. So far in January, FIIs have remained net sellers in 12 out of 13 trading days and have offloaded their stake worth Rs. 32,253.55 crore.
Consistent outflow of overseas funds from the Indian equity market is weighing heavily on Indian bourses. Nifty50 is down almost 4.3% to near 25,250 from its highest level of 26,373 recorded on January 5.
Trade tensions between the US and India were caused by the imposition of 25% punitive tariffs in mid 2025 by Washington on imports from New Delhi for buying Oil from Russia.
Going forward, the major trigger for the Indian Rupee will be the announcement of the fiscal budget for the Financial Year (FY) 2026-2027 on February 1.
The table below shows the percentage change of Indian Rupee (INR) against listed major currencies today. Indian Rupee was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | INR | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.03% | -0.04% | -0.03% | -0.01% | -0.16% | 0.52% | 0.07% | |
| EUR | 0.03% | -0.01% | 0.00% | 0.02% | -0.13% | 0.54% | 0.11% | |
| GBP | 0.04% | 0.01% | 0.00% | 0.04% | -0.12% | 0.57% | 0.11% | |
| JPY | 0.03% | 0.00% | 0.00% | 0.03% | -0.12% | 0.59% | 0.10% | |
| CAD | 0.00% | -0.02% | -0.04% | -0.03% | -0.15% | 0.55% | 0.07% | |
| AUD | 0.16% | 0.13% | 0.12% | 0.12% | 0.15% | 0.70% | 0.23% | |
| INR | -0.52% | -0.54% | -0.57% | -0.59% | -0.55% | -0.70% | -0.44% | |
| CHF | -0.07% | -0.11% | -0.11% | -0.10% | -0.07% | -0.23% | 0.44% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Indian Rupee from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent INR (base)/USD (quote).
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- Higher USD/INR is also driven by a slight recovery in the US Dollar. At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades higher near 98.65.
- However, the broader outlook of the US Dollar remains weak amid disputes between the world’s largest economies over the future of Greenland. US markets were down almost 2% on Tuesday after an extended weekend.
- US-EU relations have been impacted significantly as President Donald Trump has imposed 10% tariffs on several members of the old continent and the United Kingdom (UK) in retaliation for opposing Washington’s plans to hold Greenland’s entitlement.
- In response, several nations around the world have criticized Trump’s tariff tactics, warning that they could impact global peace. French President Emmanuel Macron strongly condemned Trump’s use of tariffs to blackmail the continent into stopping opposition to Washington’s purchase of Greenland in a speech at the World Economic Forum (WEF) in Davos on Tuesday.
- “Endless accumulation of new tariffs was unacceptable, particularly when used as leverage against territorial sovereignty,” Macron said, The New York Times (NYT) reported.
- Meanwhile, market experts have warned that US assets could see further weakness, as strained US-EU relations could weigh on US exports, given that US relations with other large economies, such as India, China, and Russia, are already fragile.
- On the domestic front, US Treasury Secretary Scott Bessent announced on Tuesday at the WEF that the White House could announce the name of the new Federal Reserve (Fed) Chairman as early as next week, and there are four candidates for the position presently.
Technical Analysis: USD/INR rallies to near 92.00
USD/INR soars to near 92. The 20-day Exponential Moving Average (EMA) at 90.60 rises and supports the advance, with price holding above this dynamic base.
The 14-day Relative Strength Index (RSI) at 73.15 (overbought) confirms stretched momentum that could curb immediate follow-through. Initial support sits at the rising EMA, and consolidation above this gauge would help stabilize the short-term trend.
With the EMA sloping higher, the path of least resistance remains to the upside, and dips toward the average would be treated as a retest of support. A moderation of RSI back below 70 would signal a healthy momentum reset without undermining the bullish bias. Overall, the setup favors continuation while the pair holds above the rising EMA; a clear break below that gauge would open room for a deeper pullback.
(The technical analysis of this story was written with the help of an AI tool.)
Indian economy FAQs
The Indian economy has averaged a growth rate of 6.13% between 2006 and 2023, which makes it one of the fastest growing in the world. India’s high growth has attracted a lot of foreign investment. This includes Foreign Direct Investment (FDI) into physical projects and Foreign Indirect Investment (FII) by foreign funds into Indian financial markets. The greater the level of investment, the higher the demand for the Rupee (INR). Fluctuations in Dollar-demand from Indian importers also impact INR.
India has to import a great deal of its Oil and gasoline so the price of Oil can have a direct impact on the Rupee. Oil is mostly traded in US Dollars (USD) on international markets so if the price of Oil rises, aggregate demand for USD increases and Indian importers have to sell more Rupees to meet that demand, which is depreciative for the Rupee.
Inflation has a complex effect on the Rupee. Ultimately it indicates an increase in money supply which reduces the Rupee’s overall value. Yet if it rises above the Reserve Bank of India’s (RBI) 4% target, the RBI will raise interest rates to bring it down by reducing credit. Higher interest rates, especially real rates (the difference between interest rates and inflation) strengthen the Rupee. They make India a more profitable place for international investors to park their money. A fall in inflation can be supportive of the Rupee. At the same time lower interest rates can have a depreciatory effect on the Rupee.
India has run a trade deficit for most of its recent history, indicating its imports outweigh its exports. Since the majority of international trade takes place in US Dollars, there are times – due to seasonal demand or order glut – where the high volume of imports leads to significant US Dollar- demand. During these periods the Rupee can weaken as it is heavily sold to meet the demand for Dollars. When markets experience increased volatility, the demand for US Dollars can also shoot up with a similarly negative effect on the Rupee.
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