Rupee Slides to 90.95 Against US Dollar as Global Pressures Mount

The Indian Rupee’s marginal decline of 6 paise to settle at 90.95 against the U.S. Dollar on February 24, 2026, underscores a period of sustained pressure on emerging market currencies. While the absolute move appears modest in isolation, the settlement at the 90.95 level is a stark reminder of the currency's vulnerability in a high-interest-rate global environment. The breach of the 90-mark earlier this year has shifted the trading range for the Rupee, forcing market participants to recalibrate their expectations for the remainder of the fiscal year and beyond.

The primary catalyst for this latest slide remains the persistent strength of the U.S. Dollar Index (DXY). As the Federal Reserve maintains a restrictive monetary stance to combat stubborn inflation in the United States, capital continues to flow toward dollar-denominated assets, draining liquidity from emerging economies like India. This "higher-for-longer" narrative has kept U.S. Treasury yields at elevated levels, making Indian debt less attractive to foreign portfolio investors (FPIs). Consequently, the steady outflow of capital from both the equity and debt markets has created a consistent demand for dollars, keeping the Rupee on the defensive despite India's relatively strong domestic growth story.

“

The Indian Rupee’s marginal decline of 6 paise to settle at 90.95 against the U.S.

Domestically, the implications of a weaker Rupee are multi-faceted and present a significant challenge for policymakers. India’s status as a major net importer of energy means that any depreciation in the local currency directly translates into higher costs for crude oil and natural gas. With the Rupee hovering near the 91.00 mark, the landed cost of energy is beginning to exert upward pressure on wholesale and consumer price indices. This "imported inflation" is a significant concern for the Reserve Bank of India (RBI), which has been striving to keep inflation within its target band. If the currency continues to slide, the central bank may find its room for maneuver on interest rates severely limited, potentially delaying any pivot toward a more accommodative stance even if domestic demand cools.

However, the depreciation is not without its silver linings for specific segments of the economy. India’s export-oriented sectors, particularly Information Technology (IT) services and pharmaceuticals, stand to benefit from a weaker Rupee. These companies earn a significant portion of their revenue in U.S. Dollars, and a higher exchange rate boosts their top-line growth and margins when converted back into local currency. This provides a natural hedge for the broader economy, as the gains in export competitiveness help to partially offset the rising cost of imports. Nevertheless, the volatility associated with such moves can be disruptive, making it difficult for firms to engage in long-term financial planning and effective hedging strategies.

The Reserve Bank of India’s role in this environment remains critical to market stability. Historically, the RBI has been proactive in managing volatility rather than targeting a specific level for the Rupee. By utilizing its substantial foreign exchange reserves, the central bank has often stepped into the spot and forward markets to prevent "runaway" depreciation and ensure orderly market conditions. Market observers are now closely watching the 91.00 level, which is viewed as a major psychological and technical resistance point. Should the Rupee break decisively past this mark, it could trigger a fresh wave of speculative selling, necessitating more aggressive intervention from the monetary authority to protect the currency from a freefall.

Looking ahead, the trajectory of the Rupee will likely be determined by a combination of global macroeconomic data and domestic fiscal health. Investors will be keeping a keen eye on upcoming U.S. labor market reports and inflation prints, as these will dictate the Federal Reserve's next moves. At home, the focus will remain on the trade deficit and the pace of foreign direct investment (FDI) inflows. While the Indian economy continues to show resilience with robust GDP growth, the external sector remains the primary source of risk. For now, the market sentiment remains cautious, with a clear bias toward further Rupee weakness unless there is a significant shift in global risk appetite or a cooling of the U.S. economy.