The Indian rupee maintained a resilient stance in mid-February 2026, closing at **90.67** against the US dollar. This marginal gain of **5 paise** reflects a delicate balancing act between robust domestic fundamentals and persistent global headwinds. The local unit found significant support from the domestic equity markets, where the Sensex climbed by over **280 points** to settle at **83,734.25**, while the Nifty 50 advanced toward the **25,820** level. Investor sentiment remains bolstered by recent trade agreements and steady corporate earnings, which have encouraged foreign institutional investors to remain active participants, contributing over **₹995 crore** in net purchases during recent sessions. External Pressures and Constraints Despite these inflows, the rupee’s appreciation was capped by a strengthening US Dollar Index, which rose to **97.22**. Market participants are closely monitoring the Federal Reserve’s upcoming policy cues, as US interest rates are expected to remain at **3.50%-3.75%** for the near term. This keeps the greenback attractive to global investors, limiting the upside for emerging market currencies. Energy costs also continue to weigh on the rupee's outlook. Brent crude prices have trended higher, trading near **$67.57** per barrel. As India relies heavily on imported oil, these price fluctuations increase the demand for dollars among importers, creating a natural resistance level for the rupee near the **90.75** mark. Liquidity and Central Bank Action The Reserve Bank of India has been active in managing volatility, keeping the currency within a narrow range of **90.60 to 90.71**. To support the banking system, the central bank has injected significant liquidity through Open Market Operations, totaling more than **₹6.39 trillion** so far in the current fiscal year. While absolute cash in circulation has reached a record **₹40 lakh crore**, the growing adoption of digital payments has kept the cash-to-GDP ratio stable at approximately **11.2%**. This structural shift, combined with a narrowing fiscal deficit target of **4.3%**, provides a stable macroeconomic backdrop even as global geopolitical tensions persist. Forex traders expect the rupee to remain range-bound in the coming weeks. The interplay between sustained foreign fund inflows and the central bank's intervention strategy will likely define the currency's trajectory as it navigates the final quarter of the fiscal year.