USD/INR: Indian Rupee Slips to Fresh Low on Jan 21, 2026 Amid Ongoing Capital Outflows

The Indian rupee weakened further in midweek trading, reaching a fresh low against the US dollar. Continued foreign fund outflows from domestic equity markets and uncertainty surrounding trade discussions with the United States have affected investor confidence.

Broader weakness across emerging Asian currencies and ongoing global policy concerns have added to pressure on the local currency.

Rupee Records Sixth Straight Session of Decline

The rupee fell as much as 0.4% to 91.3350 against the US dollar, moving past its earlier record low recorded in December. This marked its sixth consecutive session of decline, with the currency underperforming several of its regional peers.

Most emerging Asian currencies have traded weaker against the dollar so far in 2026 amid global economic uncertainty. 

The rupee has depreciated by around 1.6% this year, while the South Korean won has also seen notable losses. 

The Indonesian rupiah recently touched a fresh low, influenced by concerns over monetary policy independence and fiscal stability, while the Philippine peso has hovered near its historical low levels.

Global Developments Add to Market Volatility

Investor sentiment has been unsettled by geopolitical and policy-related developments overseas. Recent tariff-related statements from the US administration towards European nations have prompted market participants to reassess risk exposure.

In addition, a sell-off in Japanese government bonds has contributed to broader financial market volatility, compounding pressure driven by uncertainty around US policy direction and international trade relations.

Foreign Outflows Continue to Weigh on Currency

Foreign portfolio investors have continued to reduce exposure to Indian equities. Outflows have amounted to approximately $2.7 billion so far this month, following net withdrawals of nearly $19 billion in the previous year.

Market participants indicate that delays in concluding a trade agreement with the United States have affected confidence. Higher tariffs on Indian exports and steady import demand have kept dollar requirements elevated, contributing to continued pressure on the rupee.

Read More: Silver ETFs Gains in 2026: Tata Silver ETF FoF, Nippon India Silver ETF and Others.

Conclusion

The rupee’s recent movement reflects the combined influence of foreign capital outflows, external policy uncertainty and broader weakness in emerging market currencies. Near-term currency trends are likely to depend on progress in international trade discussions, global risk sentiment and domestic capital flow dynamics.

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.