# The trading theme revolves around Indian Rupee sliding to a new low of 90.43 against US dollar

The Big Question: Why Is the Indian Rupee Falling Even as the Dollar Index (DXY) Drops?

First the Re-cap: The INR hit a fresh lifetime low at 90.41, even as the King Dollar Index was dethroned to 98.95 from its peak at 110.

In theory, a weaker DXY should boost emerging-market currencies like the rupee.
In reality, domestic headwinds are overpowering global dollar softness — creating a rare divergence where the rupee weakens despite a falling dollar.

Well, here’s the right way to analyse it:
1) The Dollar Index Not Equal to USD/INR
Please note, DXY tracks the USD against a basket of developed-market currencies (EUR, JPY, GBP, etc.) — not against emerging markets.

So even if DXY falls, the USD may still strengthen against EM currencies when country-specific risks rise.

2) Heavy Dollar Demand in India Is Overpowering Global Trends. India is witnessing:
Strong dollar buying by importers (oil, electronics, commodities).
Corporates covering exposures ahead of year-end.
FPI outflows forcing custodians to buy dollars.
This domestic demand for USD keeps upward pressure on USD/INR no matter what DXY does.

3) Persistent FII Selling = A Big INR Headwind
Foreign investors have already pulled out ₹1.40 lakh crore YTD, creating sustained outflows.
More FII selling = More dollars repatriated = INR weakens
This alone can override a softening dollar globally.

4) RBI Intervention Has Likely Reduced / Turned Neutral
There are indications the RBI has stepped back slightly from aggressive intervention.
Less RBI support = INR left to market forces = Depreciation pressure intensifies.

5) Rising Oil Prices and Geopolitical Risks Add Stress
Even mildly higher crude prices automatically increase India’s dollar outgo.
India is one of the world’s biggest crude importers, so oil sensitivity is high.

6) Domestic Macro Data Has Turned Soft
The recent drop in manufacturing PMI (9-month low) and concerns on growth have:
reduced foreign inflows, weakened the rupee’s appeal relative to peers.

(Source: Business Standard, Moneycontrol, economic times, Pradyut Patnaik, SEBI Registration No.: INH000001238)

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