Rupee falls to record low of 91.95 against US Dollar: Here's why

Rupee falls to record low of 91.95 against US Dollar: Here's why

• Rupee hits record low of 91.95 against US dollar amid equity selloff
• Foreign investors pulled $3.5 billion from Indian equities in January
• RBI intervened to slow rupee's decline but downward trend continues

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The Indian rupee hit a lifetime low of 91.95 against US Dollar on January 23, with a selloff in local equities adding to ongoing pressure from dollar outflows, importer payments and speculative flows.

The rupee is now down more than 1% this week, weighed down by demand from bullion and other importers, speculative dollar buying by offshore players and foreign outflows from equities.

It settled at a record closing low of 91.88 (provisional), down 30 paise from its previous closing level.

Foreign investors have pulled out about $3.5 billion from Indian equities so far this month, pushing the Nifty 50 down nearly 5% in January. The selling has intensified this week, with the index down more than 3%, reinforcing pressure on the rupee.

The benchmark index dropped 0.8% on Friday, weighed by the selloff in shares of Adani group companies after the US Securities and Exchange Commission asked a court for 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, said.

“You can see the pressure in the way buying keeps coming in at all levels."

The rupee has fallen more than 2% in January, adding to its 5% slide in 2025.

Economists say that capital flows remain a key vulnerability for the currency. Portfolio equity outflows hit a record $18.9 billion last year and inflows through external commercial borrowings have been muted.

The Reserve Bank of India has intervened repeatedly to support the rupee and curb the pace of its decline, according to market participants.

While the central bank sold dollars aggressively on at least two occasions this week, the intervention has so far only slowed, rather than reversed, the currency’s downward trend.

"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," said Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan.

However, a weak dollar and any intervention by the RBI may support the rupee at lower levels. USD-INR spot price is expected to trade in a range of 91.60 to 92.30, Choudhary added.

Meanwhile, the dollar index, which measures the greenback's strength against a basket of six currencies, was trading 0.01% higher at 98.36.

Brent crude, the global oil benchmark, was trading 1.03% higher at $64.72 per barrel in futures trade.

On the domestic equity market front, Sensex tanked 769.67 points to settle at 81,537.70, while the Nifty dived 241.25 points to 25,048.65.

Foreign institutional investors offloaded equities worth Rs 2,549.80 crore on Thursday, according to exchange data.