Key Points:
- Indian rupee slides to a record low of 91.74 against the U.S. dollar amid fund outflows and global uncertainty.
- Foreign selling and weak equities add pressure on the currency.
- Volatility raises concerns for long-term investors and India’s attractiveness to foreign capital.
The Indian rupee slides to a record low of 91.74 against the U.S. dollar on Wednesday in Mumbai, hit by foreign fund outflows, strong importer demand for dollars, weak equities and rising global uncertainty tied to European tensions and tariff risks.
Global Uncertainty, Dollar Demand Pressure Rupee
The Indian rupee slides plunged seventy-seven paise in intraday trade to an all-time low of 91.74 against the U.S. dollar, surpassing its previous record of 91.14 set on Dec. 16, 2025. The sharp fall reflects sustained pressure from foreign capital outflows and strong demand for dollars from metal importers, traders said.
At the interbank foreign exchange market, the local unit opened weaker at 91.05 and continued to slide through the session as sentiment deteriorated. On Tuesday, the rupee had already depreciated seven paise to close at 90.97 against the dollar.
Forex traders attributed the renewed weakness to heightened geopolitical tensions in Europe, particularly surrounding the Greenland issue, and renewed fears of potential trade tariffs. Those concerns, coupled with a negative trend in domestic equities, further dampened investor confidence.
“Global risk aversion has increased, and that typically leads to dollar strength and pressure on emerging market currencies,” a senior forex dealer at a state-run bank said, speaking on condition of anonymity. “The Indian rupee slides under steady demand for dollars from importers, especially in metals.”
Foreign Outflows, Equity Losses Add To Weakness
Persistent foreign institutional investor outflows have added to the rupee’s troubles. According to exchange data, foreign investors sold equities worth Rs 2,938.33 crore on Tuesday, extending a recent selling streak.
Domestic equity benchmarks were trading lower alongside the currency. The Sensex fell 289.85 points to 81,890.62, while the Nifty declined 77.40 points to 25,155.10, reflecting cautious sentiment across markets.
“The combination of equity weakness and foreign selling creates a negative feedback loop for the currency,” said a Mumbai-based market strategist. “When foreign investors pull money out of stocks, they also demand dollars, which directly weighs on the Indian rupee slides.”
Meanwhile, the dollar index, which tracks the U.S. currency against a basket of six major peers, was marginally lower at 98.61, down 0.02 per cent. Analysts noted that even a stable dollar can pressure emerging market currencies when global risk sentiment turns cautious.
Volatility Raises Concerns For Long-Term Investors
Market participants warned that sustained currency volatility could hurt India’s appeal to overseas investors, despite strong long-term growth prospects.
“Currency volatility continues to hinder foreign investment into India, particularly for global investors assessing risk-adjusted returns,” said Sachin Sawrikar, founder and managing partner at Artha Bharat Investment Managers.
“While India’s long-term growth prospects remain robust, abrupt currency fluctuations significantly erode returns when repatriated to foreign currencies, diminishing India’s competitiveness against other emerging markets,” he said.
Sawrikar added that long-term investors face compressed yields due to elevated hedging costs, while short-term investors are exposed to the risk of sudden capital flight. “Mitigating currency volatility and sustaining policy credibility are essential to maintaining investor confidence during periods of global uncertainty,” he said.
On the commodities front, Brent crude, the global oil benchmark, was trading 1.88 per cent lower at $63.70 a barrel in futures trade, offering limited relief to the import-dependent economy. Traders said any sustained rise in oil prices could further pressure the rupee in the coming sessions.
Market participants are now watching global developments, foreign fund flows, and central bank signals closely for cues on the Indian rupee slides near-term direction.
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