INR to USD: Indian rupee shored up by modest inflows, weaker dollar

The Indian rupee (INR) strengthened slightly on Tuesday, supported by likely portfolio inflows and broad-based weakness in the U.S. dollar, although demand for dollars from local corporates kept a lid on the rise.

The Indian rupee closed at 90.5775 per dollar, up 0.2% on the day, but remained in the 90.04–90.84 range it has hovered in since the U.S.-India trade deal was announced a week ago.

Dollar sales from foreign banks, likely on behalf of custodial clients, helped the rupee advance, alongside a broader inclination to sell the dollar-rupee at the daily reference rate, traders said.

“It (USD/INR) is expected to hover in a 90.20-90.80 range in the near term but over a longer horizon, the upward channel should hold for a rise past 92 perhaps after March,” a trader at a Mumbai-based bank said.

The INR had declined to its record low of nearly 92 per dollar before the U.S. trade deal was announced. Since then, a pick up in foreign portfolio inflows has provided support, even as analysts remain sceptical over the sustenance of such flows.

Foreign investors have net purchased Indian equities worth $1.3 billion so far this month, after three consecutive months of outflows.

Other Asian currencies were mostly stronger on Tuesday, while the dollar index extended its previous session’s slide and was last at 98.8, down 0.1%.

Focus will now be on U.S. employment and consumer prices reports scheduled for later this week after being pushed back slightly due to a recent three-day government shutdown.

“If labour demand continues to remain weak it will keep alive expectations for the U.S. Federal Reserve to lower rates further this year,” MUFG said in a note.

Money markets are currently pricing in nearly 60 bps of rate cuts by the end of 2026.