USD vs INR: Rupee down over 7% in 2026: Will the pressure continue?

USD vs INR: The Indian rupee recovered some lost ground against the US dollar on Friday, supported by softer crude oil prices, easing demand for the greenback globally, and intervention by the Reserve Bank of India (RBI).

The domestic currency rose 18 paise to 96.18 against the US dollar in early trade. During the session, the rupee strengthened further to 95.8 levels as market sentiment improved marginally amid tentative signs of easing geopolitical tensions.

As of 12:09 pm IST, the rupee was trading 0.15 per cent higher at 95.93 against the US dollar, compared with the previous close of 96.03, according to Morningstar data.

Rupee still among worst-performing Asian currencies in 2026

Despite Friday’s recovery, the Indian currency has depreciated 7.04 per cent in calendar year 2026, highlighting persistent pressure from foreign fund outflows, elevated crude oil prices, and global risk aversion.

The rupee had snapped its nine-day losing streak on Thursday and continued its recovery momentum into Friday’s session. The currency opened around 96.3 against the US dollar before strengthening toward the 96 mark.

Market experts noted that the initial phase of rupee depreciation began even before the escalation of the West Asia conflict, mainly due to sustained equity selling by foreign institutional investors (FIIs).

Between January 1 and February 28, the rupee weakened by slightly over Re 1 against the US dollar. However, the pace of depreciation accelerated sharply after the Iran war began.

From March 2 to May 21 alone, the rupee depreciated 5.01 per cent as crude oil prices surged amid fears of supply disruptions linked to the conflict.

The scale of the weakness has been significant compared with previous years. The rupee’s full-year depreciation stood at 4.9 per cent in 2025 and 2.9 per cent in 2024. The currency has already crossed those levels within the first five months of 2026.

RBI intervention helped contain panic

According to Amit Pabari, MD, CR Forex Advisors, RBI measures earlier this year had helped stabilise the currency market and reduce panic-driven depreciation.

“Back in early 2025, when USDINR was hovering around 88, RBI combined rate cuts with a buy-sell swap operation, helping inject durable liquidity into the system and easing depreciation pressure,” Pabari said.

He added that the December USD 5 billion swap operation had also helped pull USD-INR back from panic highs near 91 toward the 89 zone.

Outlook remains volatile

Pabari expect volatility in the rupee to remain elevated due to ongoing geopolitical uncertainty and fluctuations in crude oil prices.

From a technical perspective, the 97 level is expected to act as an immediate resistance zone for USDINR, while support is likely around the 95.50–95.80 range.

Pabari believe RBI intervention and liquidity support measures may continue to provide temporary relief to the currency. However, sustained geopolitical tensions could keep broader pressure on the rupee intact in the near term.