The Indian currency has now slipped more than 2 per cent in January, extending its 5 per cent decline in 2025, as foreign outflows, equity market turmoil and importer demand combine to test the RBI’s resolve
The Indian rupee slumped to an all-time low of 91.95 against the US dollar on Friday under pressure from foreign fund outflows, a sharp selloff in domestic equities and persistent dollar demand from importers and offshore traders.
The currency later settled at a record closing low of 91.88 (provisional), down 30 paise from its previous close.
Equity rout and foreign exits weigh heavily
A renewed selloff in Indian equities has emerged as a key trigger for the rupee’s latest slide. The benchmark Nifty 50 has fallen nearly 5 per cent so far in January, with losses accelerating this week.
On Friday alone, the index declined more than 0.8 per cent, while the Sensex dropped 769.67 points to 81,537.70 and the Nifty slipped 241.25 points to 25,048.65.
Foreign portfolio investors have pulled out around $3.5 billion from Indian equities this month, according to market estimates.
The pressure intensified after fresh concerns around Adani Group stocks, following reports that the US Securities and Exchange Commission has sought court permission to personally email summons to billionaire Gautam Adani.
“The Adani issue has added another reason for the market to buy (into dollar/rupee),” Anil Bhansali, head of treasury at Finrex Treasury Advisors, told Moneycontrol.
Importer demand and speculative flows add strain
Beyond equity outflows, the rupee is also being dragged down by strong dollar demand from bullion importers, oil-related payments and speculative buying by offshore players. The currency has fallen more than 1 per cent this week alone.
Economists warn that capital flows remain the rupee’s biggest vulnerability. Portfolio equity outflows touched a record $18.9 billion in 2025, while inflows via external commercial borrowings have remained subdued.
RBI steps in, but trend remains weak
Market participants say the Reserve Bank of India has intervened repeatedly to smooth volatility and slow the rupee’s decline. The central bank is believed to have sold dollars aggressively on at least two occasions this week.
However, the intervention has so far only moderated the pace of the fall, not reversed it.
Downside bias persists
Analysts expect the rupee to remain under pressure in the near term, though sharp moves may be contained by central bank intervention.
“We expect the rupee to trade with a negative bias due to selling pressure from FIIs and risk-off sentiments in the global markets. Dollar demand from hedgers and imports may further pressurise the rupee,” Anuj Choudhary, research analyst at Mirae Asset Sharekhan, told Moneycontrol.
Choudhary added that a softer dollar globally and further RBI intervention could offer some support at lower levels. He expects the USD-INR spot rate to trade in the range of 91.60 to 92.30.
Global cues offer limited relief
Globally, the dollar index, which tracks the greenback against a basket of six major currencies, was marginally higher at 98.36.
Meanwhile, Brent crude futures rose 1.03 per cent to $64.72 per barrel. Higher oil prices typically weigh on the rupee, given India’s heavy dependence on crude imports.
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