USD vs INR: Rupee slips past 94 mark to hit all-time low—What’s fuelling the fall?

USD vs INR: The rupee extended its fall on Friday. It dropped 68 paise in early trade to hit a record low of 94.64 against the US dollar.

The decline comes after a sharp fall in the previous session. On Wednesday, the currency slipped 29 paise to 94.05. It had breached the 94 mark for the first time.

The fall is being driven by continued FII outflows. Ongoing tensions around Iran are also hurting sentiment.

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Conflicting signals deepen uncertainty

Amit Pabari, MD at CR Forex Advisors, said mixed global cues are keeping markets cautious.

He pointed to statements from US President Donald Trump.

“On one hand, he said he would pause attacks on Iran’s energy infrastructure for 10 days,” Pabari said. “He also suggested that talks were going very well.”

But the messaging was not consistent.

“On the other hand, he warned of increased pressure if Iran does not agree to a deal,” he added.

Iran has rejected the US proposal. It called the offer “one-sided and unfair”.

“This back-and-forth has kept markets cautious,” Pabari said. “Confidence in a quick resolution has weakened.”

He added that this uncertainty is weighing on emerging market currencies like the rupee.

Dollar strength adds quiet pressure

Pabari highlighted that the dollar remains firm.

“As doubts over a near-term resolution grew, the dollar index moved towards 99.9,” he said. “It is staying just below the key 100 mark.”

He said US economic data is also supporting the dollar.

“Jobless claims rose slightly to 210,000,” he noted. “But the labour market continues to show resilience.”

This has implications for policy.

“A stable US economy gives the Federal Reserve room to hold rates steady,” Pabari said. “This keeps the dollar supported.”

He added a simple takeaway.

“When the dollar stays firm, currencies like the rupee naturally feel the pressure.”

Relief from Hormuz route

There is one positive factor.

Iran has said it will not block vessels from friendly countries, including India, through the Strait of Hormuz.

Pabari said this reduces near-term risks.

“This lowers the immediate threat of a supply shock for India,” he explained.

India depends heavily on oil imports.

“While it does not solve the larger problem, it offers some near-term relief to the rupee,” he said.

Outlook: market stuck between hope and hesitation

Pabari said the market mood remains divided.

“Right now, the market is caught between hope and hesitation,” he said.

He sees scope for recovery if tensions ease.

“If there is meaningful de-escalation, the rupee could recover by around Rs 1 to Rs 1.5,” he said.

But risks remain high.

“Until there is clarity, volatility is likely to persist,” he added.

On technical levels, he flagged key zones.

“The 94.00–94.20 zone is a strong psychological resistance,” Pabari said. “Central bank presence is likely there.”

On the downside, support is forming lower.

“The 92.80–93.00 range is emerging as a key support zone,” he said.