The Indian rupee tumbled 72 paise to close at a record low of 91.70 against the dollar on Wednesday, on rising geopolitical tensions, uncertainty over India-US trade deal and continued outflows from foreign investors from domestic equities.
The currency opened weak at 91.08 on Wednesday before plunging to an all-time low of 91.75 during intraday trades. It recovered slightly to close the session at 91.70 compared to the previous close of 90.98.
“USD/ INR has surged to record highs near 91.70, driven by a combination of sustained FPI outflows, adverse global risk sentiment stemming from geopolitics and US–India trade frictions, and a slowdown in exporter dollar conversions even as importer hedging demand remains strong,” said Anindya Banerjee, head of commodity and currency research, Kotak Securities.
So far in January, FPIs have sold Indian equities worth Rs 30,345 crore. In 2025, they pulled out Rs 1.66 lakh crore.
A sharp rally in bullion prices has further pressured the rupee by inflating the import bill.
Forex market participants said that the Reserve Bank of India’s (RBI) intervention is helping smooth volatility but is not reversing the trend.
“The market is waiting for some signals from the RBI, which has been more active in the forward’s market. Spot intervention today treads an unusual path, as any sale of dollars in the spot market will have an impact on liquidity. The RBI has been using the buy-sell swap option to assuage liquidity so far,” said Madan Sabnavis Chief Economist, Bank of Baroda.
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In the near term, the rupee is likely to trade in a broad range 90.92 to 92.50 levels. The technical support for the currency is at 91.08, with immediate resistance seen at 92.05.
“Key catalysts to watch are progress on the India-EU FTA and signals from the Union Budget on February 1. Over the medium term, the rupee looks undervalued, but stabilization will require improvement in capital flows and global risk appetite, said Banerjee of Kotak Securities.
