The rupee weakened sharply on Wednesday, falling 61 paise in early trade to touch a fresh record low of 91.58 against the US dollar, extending its recent slide amid sustained foreign fund outflows, strong dollar demand and global risk aversion.
The domestic currency had closed at 90.97 on Tuesday, already its weakest closing level on record, after slipping seven paise during the previous session. Traders said demand for dollars from metal importers, combined with continued selling by overseas investors, kept pressure on the rupee.
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According to market participants, global uncertainty, including signals of continued policy tightening and geopolitical risks, has added to the strain on emerging market currencies. The rupee has now depreciated 4.95 per cent in 2025 so far.
Weak equities and foreign outflow have add pressure
The currency has also been impacted by weakness in domestic equity markets. According to data released by National Securities Depository Limited, foreign institutional investors withdrew more than $2.7 billion from the Indian debt and equity markets in January.
On December 16, 2025, the rupee had previously hit an intraday low of 91.14 and a closing low of 90.93 against the dollar. The losses widened much more on Wednesday.
Ritesh Bhansali, deputy chief executive officer at Mecklai Financial Services, said the central bank appeared to be active near the 91 mark.
“There was mild intervention around 91 levels, and it seemed the central bank was trying to slow the pace of depreciation. Sentiment remains weak, foreign investors are selling, equities are under pressure, bond yields are high, and geopolitical uncertainty continues to hang over markets,” he told The Economic Times.
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As per The Economic Times report, another senior trader at a public sector bank said the intervention was aimed at tempering volatility rather than reversing the trend.
“The intent is to control the speed of the fall, not to change the direction. With strong dollar demand in the market, the central bank would not want to run down reserves aggressively,” the trader said.
Market participants expect the rupee to trade with a depreciation bias in the near term, tracking global dollar strength, capital flows and geopolitical developments.
