Indian Rupee Opens Higher at 86.8525 Against US Dollar on Weaker DXY

The Indian rupee opened 9 paise higher at 86.8525 against the US dollar on February 20, supported by a weaker dollar index. The rupee had closed at 86.9487 in the previous session. The dollar index (DXY), which measures the greenback’s strength against a basket of six major currencies, fell slightly to 107.050, compared to 107.173 in the prior session.

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According to MUFG Global Market Research, the US dollar has found near-term support following Donald Trump’s latest tariff threats. The former US President has proposed a 25% tariff on autos, pharmaceuticals, and semiconductors, which could be implemented by April 2, after a review concluding on April 1. The DXY rose 0.1% to 107.20, extending its gains for a second consecutive session. However, US Treasury bond yields remained steady, with the 10-year yield staying above 4.50%.

In the domestic forex market, analysts expect USD/INR to trade in a range of 86.60–87.20, with 87.20 acting as a strong resistance level and 86.50 serving as a critical support zone. According to Amit Pabari, Managing Director at CR Forex Advisors, a breach below 86.50 could push the rupee further towards 85.80–86.00 levels.

Meanwhile, the Reserve Bank of India (RBI) Bulletin, released on February 19, revealed that the central bank sold $15.15 billion in the spot foreign exchange market in December. The RBI reported total purchases of $53.89 billion and sales of $69.05 billion during the period. This followed net sales of $20.23 billion in November, as the central bank sought to manage rupee volatility and maintain liquidity stability.

To Summarize

The rupee’s near-term movement will depend on global risk sentiment, dollar strength, and RBI’s intervention strategy. The US Federal Reserve’s monetary policy outlook and geopolitical developments, including Trump’s proposed tariffs, will play a key role in determining capital flows and currency stability in the coming weeks.