On February 24, 2026, the Indian rupee faced renewed downside pressure and slid toward the psychologically important ₹91 per US dollar level, driven by persistent dollar demand, weak risk appetite, and broad foreign exchange market dynamics. The currency’s fall reflected strain among emerging market peers and reminded investors of ongoing vulnerabilities in India’s currency markets — even as intervention by the Reserve Bank of India (RBI) acted as a buffer.
Rupee Under Pressure at Start of Trading
The rupee opened slightly weaker on Tuesday, trading in a narrow band around ₹90.90–₹90.98 as traders eyed the ₹91 mark. This move came after the currency posted modest gains on Monday but quickly headed lower as fresh dollar demand emerged from importers, maturing forward contracts, and strategic hedging activity.
Market participants often view ₹91 per dollar as a threshold where the RBI traditionally steps in more vigorously to smooth excessive volatility. On Tuesday, that tendency reappeared — slowing the pace of depreciation even amid risk-off behavior.
Strong Dollar and Global Risk Aversion
Global markets reflected heightened risk aversion as investors shuffled funds into safe-haven assets, including the US dollar. A robust dollar exerted pressure on many emerging market currencies. Traders pointed to a combination of macroeconomic uncertainty abroad and subdued appetite for risk-linked assets, with spillovers into the Indian currency.
At the same time, the dollar index, a measure of the greenback’s strength against a basket of major currencies, lifted slightly — reinforcing the backdrop for USD strength and INR weakness. The relatively firmer dollar encouraged importers and hedgers to buy USD in the spot and forward markets, adding upward pressure on the USD/INR pair.
Dollar Demand From Importers and Hedging Flows
A key feature shaping rupee dynamics has been strong importer demand for US dollars, particularly for immediate payments and hedging purposes. Local businesses often seek to lock in dollar rates when markets look uncertain, which pushes spot demand for the greenback higher.
In addition, maturing non-deliverable forward (NDF) contracts have recently contributed to dollar demand. When these contracts roll over, counterparties sometimes need to buy dollars in the spot market, leading to fresh demand and lending support to the dollar at the expense of the rupee.
Analysts watching these forward maturities note that they create intermittent upward pressure on the USD/INR rate unless the RBI chooses to roll over contracts or intervene directly.
RBI Intervention Caps the Slide
In response to persistent currency weakness, the Reserve Bank of India stepped into the market to cushion the rupee’s decline. Traders observed dollar selling by the central bank in early trade, acting to keep the rupee above the ₹91 threshold and counter rapid deterioration.
This was not the first time the RBI has intervened in recent weeks. In 2025, the central bank sold a net $51.7 billion to limit the rupee’s slide as it became one of the worst-performing emerging market currencies. Continued intervention underlines the RBI’s readiness to deploy liquidity to temper extreme moves and protect market stability.
The RBI’s actions often come amid discussions about balancing the desire for stable exchange rates with the need to conserve foreign exchange reserves — a delicate policy challenge as global financial markets remain unpredictable.
Domestic Equity Markets and Sentiment
Parallel to currency movements, Indian equity markets showed deeper losses, with major benchmarks lagging broader Asian markets. The Nifty 50 fell sharply, reflecting unease among investors as foreign exchange and market dynamics intersected with equity performance.
Weakness in stock indices can amplify currency pressures for two reasons. First, softer equity markets often reflect reduced confidence among foreign portfolio investors, who may withdraw capital or delay new investments. Second, volatile equities can trigger risk-off behavior across financial markets, leading to broader capital shifts into safe assets like the US dollar.
Broader Sentiment and Policy Uncertainty
Currency traders also cited uncertainty around trade policy developments as a contributing factor to rupee weakness. Earlier shifts in global tariff structures and changes in trade negotiations, especially involving the United States, had boosted optimism before but failed to deliver sustained gains for the rupee.
Even though local economic fundamentals for India remain relatively strong, with controlled inflation and favorable growth projections, the external environment continues to weigh on the rupee. Episodes of deferred trade talks, changing tariff outlooks, and global risk sentiment have created an uneven backdrop where currency traders remain cautious.
What Traders Are Watching Next
Looking ahead, market watchers are zeroing in on several key factors that could influence the rupee’s path:
1. RBI’s Future Interventions:
If the rupee approaches critical levels like ₹91 or beyond, traders expect continued RBI involvement in the FX market to limit volatility. The consistency and size of such interventions will remain important signals.
2. Foreign Portfolio Flows:
Increased foreign institutional investment into Indian equities and debt markets could provide fresh support for the rupee. Conversely, renewed outflows — especially amid global risk aversion — may keep the currency under pressure.
3. Crude Oil and Global Commodities:
Rising crude prices often burden oil-importing economies, including India. Higher energy costs translate to greater dollar demand for imports, exerting further pressure on INR.
4. US Dollar and Global Risk Appetite:
Movements in the US dollar index and broader risk sentiment in global markets will continue to drive emerging market currencies, including the rupee.
Conclusion
On February 24, 2026, the rupee clearly felt the effects of strong dollar demand, unsettled global markets, and deferential investor risk appetite. While its move toward ₹91 per dollar signaled underlying pressure, active intervention by the RBI helped prevent a more severe slide. Together, these developments highlighted how global and domestic factors can converge to shape currency trends — and how central bank actions remain vital in navigating turbulent foreign exchange waters.
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