USD/INR: Indian Rupee Falls to Record Low on Jan 29, as Capital Outflows Weigh on Currency

The Indian rupee weakened to a fresh record low against the US dollar, pressured by continued foreign capital outflows and rising demand for dollar hedging by importers., as per Reuters report.

These factors outweighed support from India’s steady economic growth and recent trade developments. Market participants also pointed to possible central bank intervention aimed at limiting excessive currency volatility.

Rupee Touches New Low Against Dollar

The rupee slipped to 91.9850 per US dollar, moving past its previous record low recorded last week. The recent decline highlights sustained pressure on the currency, which has weakened steadily in recent sessions.

Foreign Outflows And Hedging Activity Increase Pressure

Market participants indicated that persistent foreign portfolio outflows have contributed to the rupee’s weakness. At the same time, importers and corporates have increased hedging activity to protect against further depreciation, adding to demand for the US dollar.

Central Bank Seen Managing Volatility

Traders suggested that the Reserve Bank of India likely intervened before the opening of the local spot market to slow the pace of decline as the currency approached the 92 per dollar level. The central bank continues to maintain that it does not target a specific exchange rate and intervenes only to curb excessive volatility.

Tariffs And Trade Developments Add To Currency Stress

The rupee has remained under pressure since the introduction of higher US tariffs on Indian merchandise exports in August. 

The currency has also weakened against other major currencies, including the euro and Chinese yuan, during this period. Despite this, India has reported strong economic growth and recently concluded a free trade agreement with the European Union.

Trade-Weighted Index Reflects Weakness

On a trade-weighted basis, the real effective exchange rate of the rupee stood at 95.3 in December, marking its lowest level in ten years according to central bank data. This indicates a broader weakening of the currency against its key trading partners.

Read More: NSDL Share Price in Focus as Profit Grows and Margins Improve in Q3 FY26 Results.

Conclusion

The rupee’s move to a record low reflects sustained pressure from foreign fund outflows, importer hedging and external trade factors. While domestic economic growth remains steady, currency markets are likely to remain sensitive to global developments and central bank actions in the near term.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.