• USD/INR hits all-time high at 77.17 on rising crude oil prices and consistent withdrawal from FIIs.
• The Indian rupee will continue to depreciate further as a rally in oil prices is far from over.
• The expectation of stagflation in Europe is haunting the developing economies.

The USD/INR has claimed an all-time high of 77.17 on Tuesday as the rising crude oil prices have trimmed the potential of the Indian rupee against the mighty greenback.

India, being a major importer of crude oil has to face significant outflows in addressing higher crude oil prices. West Texas Intermediate (WTI) oil prices near $125.00, indicating a wider fiscal deficit for India going forward. The rally in crude oil is far from over and Indian equities may face some serious plunge in their margins in the upcoming earnings season.

Apart from the surging oil prices, Foreign Institutional Investors (FII) are continuously withdrawing their funds over the geopolitical tensions. Intensifying fears amid the Russia-Ukraine war has advocated a situation of stagflation in Europe. The old continent, being a leading market for India, will affect the latter's fiscal revenue and henceforth hurt the Indian rupee.

Meanwhile, the Ukrainian President has agreed to Russia’s condition in which Kyiv would withdraw its application of membership to NATO. This has brought a follow-up buying in global equities but risk-sensitive currencies need more assurance.

The US dollar index (DXY) is juggling around 99.10 as investors await a fresh trigger that may bring stimulus for further direction.

The headlines from the Ukraine crisis will continue to remain a key driver for the pair. However, investors will also focus on US Consumer Prices Index (CPI) numbers, which are due on Thursday.