The rupee plunged to a record Rs 92 against the US dollar, pressured by foreign outflows, global churn and restrained RBI action. Exporters held back inflows, adding to weakness, while markets await clarity on the currency’s path.
The rupee plunged to a lifetime low of Rs 92 against the US dollar, marking another sharp setback for the currency. The fall reflects a combination of persistent foreign portfolio outflows, weak global sentiment and restrained intervention from the Reserve Bank of India.
India’s currency has historically faced pressure from trade and current account deficits, leading to a steady long‑term depreciation. What makes the present slide unusual is that the rupee is weakening even as the dollar itself has softened against other major currencies. While many emerging market currencies gained ground in 2025, the rupee still depreciated by around 5%, underscoring the scale of external pressure.
Foreign selling remains the biggest drag. Outflows crossed Rs 18 billion last year and the trend has continued into 2026. Exporters, anticipating further weakness, are delaying the conversion of their dollar earnings, adding to the downward momentum. Without decisive central bank action, the currency is expected to hover near current levels.
Routine month‑end demand from importers and hedging activity have also contributed to the slide. Elevated US bond yields and persistent dollar strength have kept emerging market currencies under stress, with the rupee among the hardest hit.
The RBI has the reserves to manage volatility but has so far avoided defending any particular level. Unless markets turn disorderly, the central bank is unlikely to intervene aggressively. This stance has allowed the rupee to drift lower, reflecting a preference for stability rather than a fixed threshold.
Despite the record low, India’s macroeconomic fundamentals remain intact. Growth is stable, inflation is manageable, and the broader outlook does not suggest structural weakness. The current decline is better understood as part of a global realignment rather than a deterioration in domestic conditions.
A potential turnaround could hinge on external developments. If the delayed US‑India trade deal is finalized, the rupee could strengthen, possibly appreciating to below 90 against the dollar. Until then, foreign outflows and global pressures are expected to keep the currency under strain.
