The Indian rupee opened on a positive note on Wednesday, February 25, 2026, rising 6 paise to 90.89 against the US dollar in early trade. The appreciation came amid a weaker US dollar index and a strong rebound in the domestic equity markets. However, the gains in the local currency were capped due to a sharp rise in global crude oil prices and continued outflows by Foreign Institutional Investors (FIIs).

Currency traders noted that while the initial momentum favoured the rupee, external pressures such as higher crude prices and persistent dollar demand prevented a stronger rally.

Early Trade Performance in the Forex Market

At the interbank foreign exchange market, the rupee opened at 90.94 against the US dollar before rising further to 90.89. This marked a gain of 6 paise compared to its previous closing level of 90.95.

On Tuesday, February 24, 2026, the rupee had traded within a narrow range and eventually settled 6 paise lower at 90.95 against the greenback. The limited movement highlighted cautious sentiment among traders amid mixed global cues.

Forex experts pointed out that the rupee has been trading in a tight range over the past few sessions, indicating balanced demand and supply in the market.

According to Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, dollar buying continued on Tuesday as the rupee ended at 90.95 with minimal movement throughout the day. He suggested that the likely trading range for the rupee could be around 90.75 to 91.25, with dips in the dollar getting bought by importers and other market participants.

Dollar Index and Its Impact

The dollar index, which measures the greenback’s strength against a basket of six major global currencies, was trading 0.07 percent lower at 97.77. A weaker dollar index generally supports emerging market currencies like the rupee because it reduces pressure from global capital flows.

When the dollar weakens globally, investors tend to shift funds into higher-yielding assets, including emerging market equities and bonds. This often provides support to currencies like the Indian rupee.

However, traders remain cautious as global economic uncertainties and monetary policy expectations continue to influence dollar movements.

Crude Oil Prices Limit Gains

While the rupee gained in early trade, the upside was restricted due to a rise in global oil prices. Brent crude, the global oil benchmark, climbed 1.37 percent to 71.74 US dollars per barrel in futures trade.

India is one of the largest importers of crude oil, and any increase in oil prices has a direct impact on the country’s current account deficit and inflation levels. Higher crude prices increase the demand for dollars, as oil importing companies need to purchase more dollars to pay for their imports.

This additional dollar demand puts pressure on the rupee and often limits its gains.

Forex traders said that sustained higher oil prices could keep the rupee under pressure in the near term, especially if global supply concerns continue.

Strong Rebound in Domestic Equity Markets

One of the key factors supporting the rupee was the strong performance of domestic equity markets. On Wednesday morning, the BSE Sensex surged 558.79 points to 82,784.71, while the Nifty 50 climbed 157.05 points to 25,581.70.

The rebound in equities improved overall market sentiment and boosted investor confidence.

A strong stock market often attracts foreign portfolio investments, which can increase dollar inflows and support the domestic currency. However, the actual flow data suggests that foreign investors have remained cautious.

FII Outflows Continue

According to exchange data, Foreign Institutional Investors (FIIs) offloaded equities worth ₹102.53 crore on Tuesday, February 24.

Continuous FII outflows can put pressure on the rupee because foreign investors convert their investments into dollars when they exit Indian markets.

Although the amount sold on Tuesday was relatively modest, consistent outflows over time can impact both equity markets and the currency.

Market participants are closely monitoring global risk sentiment and US economic data to gauge the future direction of foreign investments.

Factors Influencing Rupee Movement

Several key factors are currently influencing the movement of the rupee:

1. Global Dollar Strength – Changes in the dollar index directly impact emerging market currencies.

2. Crude Oil Prices – As a major oil importer, India’s currency is sensitive to fluctuations in oil prices.

3. Foreign Capital Flows – FII and FDI inflows or outflows significantly affect dollar supply.

4. Domestic Economic Indicators – Inflation, growth data, and policy decisions by the Reserve Bank of India (RBI) also play a crucial role.

5. Global Economic Developments – Geopolitical tensions and economic data from major economies influence investor sentiment.

Narrow Trading Range Signals Stability

The rupee’s recent movement within a narrow band suggests relative stability despite global volatility.

Traders believe that unless there is a major external shock, the rupee may continue to trade within the projected range of 90.75 to 91.25 in the short term.

The Reserve Bank of India (RBI) is also known to intervene in the forex market when excessive volatility occurs, helping maintain orderly conditions.

Impact on Importers and Exporters

A stronger rupee benefits importers as it reduces the cost of importing goods and raw materials. However, exporters may face challenges because a stronger currency makes Indian goods relatively expensive in global markets.

Given the limited appreciation seen in early trade, the impact on trade competitiveness remains minimal for now.

Broader Economic Implications

The rupee’s movement reflects a balance between positive domestic cues and external headwinds. While strong equity markets and a weaker dollar provided support, rising oil prices and FII outflows acted as counterweights.

In the broader economic context, currency stability is crucial for maintaining investor confidence and controlling imported inflation.

If crude prices continue to rise sharply, it could impact India’s trade balance and put additional pressure on the rupee.

On the other hand, sustained equity market strength and stable global conditions could help the currency maintain its current range.

Outlook for the Coming Sessions

Looking ahead, traders will focus on:

• Movement in the dollar index

• Trend in global crude oil prices

• FII investment patterns

• Domestic macroeconomic data releases

• Policy signals from major central banks

Market experts believe that the rupee’s immediate trajectory will depend largely on global developments, particularly oil prices and US economic indicators.

For now, the 6 paise gain to 90.89 indicates modest optimism, but the overall tone remains cautious.

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