The Crossbill News Desk
Mounting pressure on the Indian currency intensified this week as the rupee slid to an all-time low against the US dollar, marking its sharpest weekly fall in nearly six months amid persistent foreign outflows and rising importer hedging.
In intra-day trade, the rupee weakened to a historic low of 91.9650 to the dollar before settling at 91.96, reflecting growing unease in the foreign exchange market. Dealers said sustained dollar demand and capital flight pointed to weakening confidence in the currency, even as the Reserve Bank of India continued to intervene.
The decline comes against the backdrop of a sharp slowdown in foreign direct investment and foreign portfolio inflows, reversing a trend that had largely held since the 1990s. The RBI has been selling dollars regularly to defend the rupee, a politically sensitive indicator, but the recent slide has proved difficult to arrest.
Among its Asian peers, the rupee has emerged as the worst-performing currency, even as several other regional currencies have shown signs of recovery. Analysts say the weakness cannot be attributed solely to global pressures, such as the United States imposing some of the highest tariff rates on Indian exports.
“This is largely a repeat of what we saw through most of 2025. The rupee stays under pressure regardless of broader cues,” Kunal Kurani, vice-president at Mecklai Financial Services told Reuters news agency.
The currency’s troubles have been compounded by sustained selling in Indian equity markets. Foreign investors have been offloading stocks for several months, adding to pressure on the RBI’s currency management efforts. The benchmark Nifty 50 index fell 2.5% this week, while foreign outflows from Indian equities in the first month of the new year stood at around $3.5 billion, according to news agency data.
Overall, the rupee declined about 5% in 2025 and the new year has begun on a weak note, with the currency already losing 2.3% of its value so far.
Signs of stress are also visible in India’s reserve management strategy. Bloomberg reported that the country’s holdings of US Treasuries have dropped to a five-year low as authorities moved “to support its currency and diversify its reserves.”
At the same time, the share of gold in India’s reserves has increased, in line with a broader global trend of diversification away from the dollar. Analysts, however, note that in India’s case, reserve drawdowns to defend the rupee may be a key factor behind the shift.
Adding to the backdrop, the newly appointed US ambassador, Sergio Gor, met RBI Governor Sanjay Malhotra last week to “discuss technology cooperation.”
The rupee’s slide has also revived political memories. When the present government took office in 2014, the exchange rate—then around Rs 64 to the dollar—was a major point of public debate. Narendra Modi, who was Gujarat chief minister at the time, had in 2012 mocked the UPA government, saying the rupee’s fall was due to “corruption” under its rule.
In intra-day trade, the rupee weakened to a historic low of 91.9650 to the dollar before settling at 91.96, reflecting growing unease in the foreign exchange market. Dealers said sustained dollar demand and capital flight pointed to weakening confidence in the currency, even as the Reserve Bank of India continued to intervene.
The decline comes against the backdrop of a sharp slowdown in foreign direct investment and foreign portfolio inflows, reversing a trend that had largely held since the 1990s. The RBI has been selling dollars regularly to defend the rupee, a politically sensitive indicator, but the recent slide has proved difficult to arrest.
Among its Asian peers, the rupee has emerged as the worst-performing currency, even as several other regional currencies have shown signs of recovery. Analysts say the weakness cannot be attributed solely to global pressures, such as the United States imposing some of the highest tariff rates on Indian exports.
“This is largely a repeat of what we saw through most of 2025. The rupee stays under pressure regardless of broader cues,” Kunal Kurani, vice-president at Mecklai Financial Services told Reuters news agency.
The currency’s troubles have been compounded by sustained selling in Indian equity markets. Foreign investors have been offloading stocks for several months, adding to pressure on the RBI’s currency management efforts. The benchmark Nifty 50 index fell 2.5% this week, while foreign outflows from Indian equities in the first month of the new year stood at around $3.5 billion, according to news agency data.
Overall, the rupee declined about 5% in 2025 and the new year has begun on a weak note, with the currency already losing 2.3% of its value so far.
Signs of stress are also visible in India’s reserve management strategy. Bloomberg reported that the country’s holdings of US Treasuries have dropped to a five-year low as authorities moved “to support its currency and diversify its reserves.”
At the same time, the share of gold in India’s reserves has increased, in line with a broader global trend of diversification away from the dollar. Analysts, however, note that in India’s case, reserve drawdowns to defend the rupee may be a key factor behind the shift.
Adding to the backdrop, the newly appointed US ambassador, Sergio Gor, met RBI Governor Sanjay Malhotra last week to “discuss technology cooperation.”
The rupee’s slide has also revived political memories. When the present government took office in 2014, the exchange rate—then around Rs 64 to the dollar—was a major point of public debate. Narendra Modi, who was Gujarat chief minister at the time, had in 2012 mocked the UPA government, saying the rupee’s fall was due to “corruption” under its rule.
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