- Date of decline: January 23, 2026
- Exchange rate: Rupee at 91.95 per US Dollar, its weakest level ever.
- Market impact: Sensex and Nifty witnessed sharp selloffs as foreign investors pulled out funds.
- RBI action: The Reserve Bank of India intervened by selling dollars to slow the decline, but the pressure remains.
Why Did the Rupee Fall?
1. Foreign Investor Outflows
- In January alone, $3.5 billion was withdrawn from Indian equities, reflecting reduced confidence in emerging markets.
- Global investors are shifting towards safer assets amid geopolitical and trade uncertainties.
2. Equity Market Selloff
- Domestic stock markets faced heavy selling pressure, further weakening investor sentiment.
- The Sensex and Nifty dropped significantly, amplifying currency volatility.
3. Importer Payments and Dollar Demand
- Rising crude oil prices and higher import bills increased demand for dollars.
- Importers rushed to hedge against further rupee depreciation, adding stress to forex markets.
4. Speculative Flows
- Traders betting against the rupee intensified the decline.
- Speculative positions magnified volatility, making RBI’s interventions less effective.
Global Context
- The US Dollar strengthened globally as investors sought safe havens amid trade tensions and geopolitical risks.
- Although President Donald Trump softened his stance on tariffs against Europe, the overall risk appetite remains fragile.
- Emerging market currencies, including the rupee, continue to face headwinds from global uncertainty.
Impact on India
- Imports: Costlier imports, especially crude oil, will push inflation higher.
- Consumers: Prices of fuel, electronics, and other imported goods are expected to rise.
- Businesses: Exporters may benefit from a weaker rupee, but import-dependent industries face margin pressures.
- Policy: RBI may need to balance inflation control with currency stabilization, possibly tightening monetary policy.
Outlook Ahead
- Analysts expect continued volatility in the rupee unless foreign inflows stabilize.
- RBI’s interventions may provide temporary relief but structural pressures remain.
- The 92-mark is now seen as a critical psychological threshold, and crossing it could trigger further panic in markets.
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In summary, the rupee’s fall to 91.95 against the US Dollar reflects a mix of global and domestic pressures, with foreign outflows, equity selloffs, and rising import costs driving the decline. While RBI intervention offers short-term relief, long-term stability will depend on restoring investor confidence and managing inflation risks.
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