Indian Rupee Hit Record Low Again

On January 23, 2026, the Indian rupee reached a new all-time low of 91.81 against the US dollar, beating the previous record of 91.74 established the day before. This was a 0.2% drop for the day, with the currency opening firmer at 91.43 before importer dollar demand increased pressure. The rupee is down 5.3% year to date in 2026, on track for its largest annual decrease since 2022.

Key Causes

A strong US dollar, backed by rising US Treasury yields and fewer Federal Reserve rate cuts, has weighed on developing-market currencies like the rupee. Foreign institutional investor outflows were $16.5 billion in 2025, supporting dollar demand during repatriation, while India's trade deficit hit $41.7 billion in October 2025. Additional factors include US tariffs of up to 50% on steel and aluminum, rising crude oil prices that raise import costs, and stalled US-India trade talks, which add uncertainty.

RBI Interventions

The Reserve Bank of India (RBI) has actively intervened, undertaking approximately $2 billion in dollar/rupee FX swaps in recent days to alleviate liquidity pressures while avoiding a significant depletion of reserves. Spot market sales kept the rupee near its lows, preventing a breach above critical levels such as 92. These initiatives reduced hedging costs amid equity outflows and bullion import demand.

Economic Impacts

A weaker rupee increases import costs for oil and commodities, causing inflation and aggravating the trade imbalance while increasing export competitiveness. It increases prices for businesses that rely on imports and overseas funding, while lowering investor confidence in rupee assets. Manufacturing is witnessing reduced PMI growth, which contributes to broader economic slowdown indicators.

Outlook Forcasts

Analysts predict the rupee to trade between 90.92 and 92.50 in the immediate term, with resistance at 92.05 and support at 91.08. Some estimates suggest it may hit 92 by the end of March 2026 as a result of ongoing withdrawals, but RBI assistance may enable it stabilize at 90.50-90.70 if global risk sentiment improves. The advancement of the India-EU Free Trade Agreement and the Union Budget for February 1 will have an impact on medium-term stability.