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    Rupee Slips to Record Low Against US Dollar Amid Global Uncertainty and Capital Outflows

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    The Indian rupee weakened further on Tuesday, settling at a record low of 90.97 against the US dollar at the interbank foreign exchange market, reflecting sustained pressure from global economic uncertainties, strong demand for dollars, and continued outflows of foreign capital from domestic markets.

    Currency traders said the local unit remained under stress throughout the session, opening slightly weaker and gradually losing ground as demand for the US currency increased. The rupee began the day at 90.91 per dollar, touched an intraday low of 91.06, and finally closed at its lowest-ever level of 90.97 on a provisional basis. This marked a decline of 7 paise compared to the previous session’s close.

    The fall comes a day after the rupee had already depreciated sharply, indicating persistent weakness in investor sentiment. Market participants attributed the decline primarily to strong dollar buying by importers, particularly in the metals and energy sectors, along with ongoing withdrawals by foreign institutional investors from Indian equities.

    Global Factors Weigh on Emerging Market Currencies

    Forex experts noted that broader global developments played a significant role in pressuring the rupee. Heightened geopolitical and economic uncertainties, coupled with renewed signals of expansionary policies from the United States, have increased risk aversion among global investors. As a result, funds have moved away from emerging market assets towards safer instruments, impacting currencies like the Indian rupee.

    Uncertainty surrounding international trade discussions and strategic issues in key global regions has also added to volatility in currency markets. Traders said such factors have made investors cautious, leading to a preference for holding the dollar over emerging market currencies.

    Despite the weakness, analysts pointed out that the rupee’s fall was relatively contained due to a softer dollar index and possible intervention by the Reserve Bank of India (RBI). The dollar index, which tracks the strength of the US currency against a basket of six major currencies, was trading lower during the session, providing some relief to the rupee.

    Domestic Market Conditions Add Pressure

    On the domestic front, a sharp decline in equity markets further weighed on the local currency. Benchmark indices ended significantly lower, with the Sensex falling over 1,000 points and the Nifty slipping below key levels. The sell-off was largely driven by foreign portfolio investors, who continued to reduce exposure to Indian stocks amid global uncertainty.

    Exchange data showed that foreign institutional investors had sold equities worth more than ₹3,200 crore in the previous session. Persistent capital outflows have been a major factor behind the rupee’s recent weakness, as reduced foreign inflows limit dollar supply in the domestic market.

    Additionally, steady crude oil prices in global markets kept import-related dollar demand elevated. India’s dependence on imported energy means that even moderate firmness in oil prices can increase pressure on the rupee by widening the trade deficit and boosting demand for foreign currency.

    Outlook Remains Cautious

    Market analysts expect the rupee to trade with a cautious bias in the near term, given the combination of global risk aversion and domestic market volatility. While a weaker dollar globally and potential RBI intervention could help prevent a sharp or disorderly fall, sustained recovery may depend on a reversal in foreign fund flows and improved clarity on global economic developments.

    Traders indicated that the rupee is likely to move within a broad range in the coming sessions, with support expected at lower levels due to central bank actions. However, any fresh escalation in global uncertainties or continued weakness in domestic equities could renew pressure on the currency.

    The recent depreciation highlights the challenges faced by emerging market currencies in a volatile global environment. For India, policymakers and market participants will closely monitor capital flows, inflation trends, and external sector developments to assess the impact of the weaker rupee on the broader economy.

     

    While a softer rupee can support exports to some extent, it also raises the cost of imports and can add to inflationary pressures if the trend persists. As global cues continue to dominate currency movements, the rupee’s trajectory in the coming weeks is expected to remain closely linked to international market sentiment and policy signals from major economies.

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