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According to Bloomberg data, the domestic currency is down by 2.22%, so far in January. Thus far in the current financial year, the local unit is down by 7.02%
Beyond the headline GDP numbers, the Economic Survey sounds a cautionary note on the rupee. It ties together global fragility, capital flows, and the imperative for competitive manufacturing
The Economic Survey says India’s inflation rate, headline and core, excluding precious metals, will likely be higher in FY27
Budget 2026 is expected to place renewed emphasis on attracting stable foreign capital. Measures such as enhancing FDI limits in select sectors and offering tax incentives to overseas investors are likely to be considered, say experts
At 11.55 am, the currency was trading at 91.57 against the US dollar, a day after it sank to a new low of 91.74
In November, the Indian rupee remained in the range of 88.56-89.45 against the US dollar.
With the current fall, the domestic currency turned out to be the second worst performing currency among Asian peers with a fall of 1.98 percent so far in 2026.
The domestic currency opened a tad weaker on January 20 but declined rapidly to 91.0650 against the dollar. This level was touched nearly after a month
In the December quarter, the rupee depreciated 1.21 percent, even falling past the psychological mark of 91 against the dollar as Trump's tariff continued to weigh on the currency
Indian rupee has been under pressure since the US imposed tariffs on the most countries, including India, which led to outflows of funds from the equities and debt. In the depreciation cycle, the local currency even crossed the psychological mark of 91/USD, which prompted the Reserve Bank of India (RBI) to intervene in the spot market to curb volatility.
Indian currency has been under pressure in the last few months due to delay in the India-US trade deal, which led to the currency hitting fresh record lows. On the other hand, the limited intervention by the RBI was also adding to the pain.
The rupee is down 0.33 percent in 2026 on subdued foreign equity inflows and hedging by importers
The dollar index, which measures the greenback's strength against a basket of six major currencies, rose to 98.770 in the morning trade from the previous close of 98.424.
For 2026, experts expects USD/INR to consolidate in a broad 88-91.50 range, with markets closely tracking trade talks and capital movements.
Given my understanding of the evolution of “underlying” inflation over the next few quarter, in the backdrop of the forecast headline inflation, there remains a concern that prices might be less than optimal for stable economic growth, Bhattacharya said.
Tariff differential is a factor shaping market perception. The US has imposed tariffs as high as 50% on Indian imports, significantly above many of its Asian counterparts, including Indonesia, leading to a sharp depreciation of the currency.
On December 19, the rupee staged a strong comeback, rising past the psychologically important 90-mark against the dollar to settle at its highest level in over two weeks
The currency has been under pressure in the last few weeks especially due to delay in the trade deal, which led to the currency hitting fresh record lows. On the other hand, the limited intervention by the RBI was also adding to the pain.
According to Bloomberg data, the rupee appreciated 0.67 percent on a single day, emerging as the best-performing currency among Asian peers. Over the week, it gained 0.86 percent, and since the RBI began heavy interventions on December 16, the currency has strengthened by 1.54 percent.
Going ahead, the next chapter for the rupee will hinge on three critical variables: the trajectory of India-US trade talks, portfolio flows in the face of elevated US yields, and the central bank’s appetite for intervention if volatility spikes.
The domestic currency opened at 90.3700 against the US dollar, as compared to 90.3775 against the greenback at previous close
According to Nilesh Shah of Kotak Mahindra AMC, FII flows are likely to return in 2026 as global rate cycles ease, US growth softens, and doubts grow around overhyped AI trades elsewhere.
The central bank increased its short dollar forward positions by $6 billion in September, marking the first rise in six months. This marks an important move by the central bank when the Indian rupee has been depreciating sharply and support was needed without reducing the forex reserves. Usually, forward position by the RBI helps the currency to cool off a bit.
The rupee has slipped 5.97% this year, making it the worst performing currency in Asia followed by the Indonesian rupiah, down 3.53%, and the Philippine peso, which has declined 1.37%
Currency markets have no natural anchor like equity markets do. So, movements can overshoot in the short term. However, once volatility becomes excessive, the RBI will step in, Mishra said.
