Mumbai, January 23, 2026
The Indian rupee tumbled to an unprecedented intraday low of 92.00 against the US dollar on Friday, marking a historic depreciation that underscores mounting pressures from foreign investor outflows and escalating global geopolitical tensions. The currency recovered marginally to settle at a provisional closing low of 91.88, down 30 paise from the previous close of 91.58, according to market data. This breach of the psychological 92 barrier comes amid a weekly decline of 1.18% and a monthly slump of over 2%, representing the steepest weekly fall in six months.
In a volatile trading session, the rupee opened at 91.45 and touched an intraday high of 91.41 before plunging to its all-time low of 92.00, surpassing the previous record of 91.65 set earlier this week on January 21. The domestic unit's woes persisted despite a broadly weakening US dollar index, with most Asian currencies gaining ground against the greenback. Over the past year, the rupee has depreciated by approximately 5%, exacerbating import costs and fueling inflation concerns in India's import-dependent economy.
### Key Drivers Behind the Slide
Analysts attribute the rupee's sharp downturn to a confluence of domestic and international factors. Persistent selling by foreign institutional investors (FIIs) has been a major culprit, with FIIs offloading equities worth Rs 2,549.80 crore on Thursday alone. This capital flight is compounded by heightened hedging activities from importers and corporates, who are bracing for further weakness, alongside reduced dollar sales from exporters in the forward market.
Global headwinds have amplified the pressure. Surging US Treasury yields, a rebound in crude oil prices—with Brent crude climbing 1.03% to USD 64.72 per barrel—and a risk-off sentiment in international markets have bolstered the dollar's safe-haven appeal. Geopolitical flashpoints, including US President Donald Trump's renewed threats over Greenland and broader Middle East instability, have further eroded investor confidence.
"Weak domestic markets and unabated foreign fund outflows are keeping the rupee under sustained pressure," said Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan. "Dollar demand from hedgers and importers, coupled with global risk aversion, suggests a negative bias in the near term." Choudhary forecasts the USD-INR pair to hover between 91.60 and 92.30 in the coming sessions.
The benchmark Sensex and Nifty indices mirrored the currency's distress, with the Sensex shedding 769.67 points to close at 81,537.70 and the Nifty dropping 241.25 points to 25,048.65.
### RBI's Balancing Act
The Reserve Bank of India (RBI) intervened multiple times during the week to stem the rupee's freefall, selling dollars in the spot market and executing buy/sell swaps to inject liquidity. These measures curbed sharper losses but failed to reverse the underlying bearish trend. Market participants anticipate continued RBI support at lower levels, though officials have refrained from commenting on specific actions.
"This week's underperformance is a repeat of 2025's patterns, where skewed flows and hedging have built a bearish outlook," noted a Reuters report on the currency's vulnerability. The RBI's forex reserves, while robust at over USD 650 billion, may face increased drawdowns if outflows persist.
### Broader Implications and Outlook
The rupee's record low spells trouble for India's trade balance, as higher import bills for oil, gold, and electronics could stoke inflationary pressures and widen the current account deficit. Exporters, on the other hand, may see a silver lining in enhanced competitiveness, though muted global demand tempers optimism.
Looking ahead, experts warn of further volatility if US Federal Reserve rate cut expectations falter or if FII outflows accelerate. "The rupee remains vulnerable to new all-time lows amid these skewed flows," the report cautioned, urging policymakers to monitor capital flows closely.
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