USD/INR rose for a second day, trading near 95.00 in Asia on Monday after India’s HSBC Manufacturing PMI. It was 54.7 in April, revised from 55.9, and above 53.9 previously.
The pair also firmed as the US Dollar regained losses amid uncertainty over US–Iran talks. Iran’s armed forces warned of a “harsh” response and told the US not to enter the Strait of Hormuz.
Strait Of Hormuz Risks
Iran’s military said commercial ships and oil tankers should not move through Hormuz without co-ordination. Iranian officials said US involvement would be seen as a ceasefire violation, and warned against threats in the Persian Gulf.
Donald Trump said the US will start guiding neutral ships out through the Strait of Hormuz from Monday. Iran said it is reviewing Washington’s response to its latest 14-point proposal, while Trump said it may fall short, according to Bloomberg.
WTI traded near $100.00 per barrel, which can raise dollar demand in India as a major oil importer. Reuters reported April portfolio outflows of about $6.5 billion, with 2026 withdrawals at about $20.6 billion.
Technically, USD/INR stayed in a rectangle, above the 9-day and 50-day EMAs, with a 14-day RSI near 64. Levels include 95.33, 94.50, 93.11, 92.50, and 92.14.
Strategy And Key Levels
We see the Rupee facing continued pressure as tensions in the Strait of Hormuz keep oil prices elevated around $100 per barrel. Given this, derivative traders should consider long positions on the USD/INR pair, potentially through call options to hedge against further Rupee depreciation. The latest data from the Energy Information Administration showed a surprise 2.1 million barrel draw in US crude inventories, reinforcing the bullish case for oil.
The ongoing but uncertain US-Iran peace talks are pushing up market anxiety, which we can see in India’s VIX climbing over 22 recently. This heightened implied volatility makes options more expensive but also reflects the significant risk of a sudden move in the currency pair. We anticipate increased hedging activity from importers, who will be locking in forward rates to protect against the USD strengthening past the 95.33 record high.
This situation mirrors the market dynamics we observed in early 2022 after the invasion of Ukraine, when soaring energy prices led to broad weakness in emerging market currencies. The persistent portfolio outflows, which have now surpassed the total for all of 2025, show that foreign investors are reducing their exposure to India amid these headwinds. This consistent demand for dollars to repatriate funds provides a strong underlying bid for the USD/INR pair.
From a technical standpoint, with the pair holding above key moving averages, the path of least resistance appears to be upward. We are watching the 95.33 all-time high as the next logical target for any bullish strategies. Traders should use the nine-day EMA around 94.50 as a critical short-term support level, a break of which could signal a temporary loss of momentum.
