The Indian rupee breached 91-mark for the first time in 2026 on Tuesday amid increased demand for dollars on account of outflows.
The domestic currency fell to a low of 91.06 against the dollar during intra-day before settling at 90.98, down 6 paise from the previous close, Bloomberg data showed. It breached the 91-mark for the first time on December 16 and fell to a record low of 91.08, after which the Reserve Bank of India (RBI) stepped in to support the currency.
They brought it back to 89 level through its aggressive dollar sales.
Asia’s Weakest Currency
In January, the rupee has fallen over 1%. In FY26 so far, it has declined 6.5%, the highest in three years. This has made the rupee Asia’s worst-performing currency against its Asian peers. The persistent foreign outflows continue to keep rupee under pressure. So far in January, foreign portfolio investors have offloaded shares worth about $2.7 billion.
“The continued global uncertainties, including US pressure on Greenland, have led to a risk-off sentiment in markets. This has led to strong demand for precious metals. The risk-off sentiment, along with strong offshore hedging, has led to rupee touching 91 per dollar,” Sameer Karyatt, executive director and head of trading at DBS Bank India, said in a note.
In his latest bid to acquire Greenland, President Trump announced 10% tariffs on European and NATO allies, effective from February 1. Tariffs may go up to 25% from June 2026.
RBI Market Intervention
Traders said that the RBI’s likely intervention prevented the rupee from falling to record low on Tuesday. “The RBI stepped in and sold dollars around the 91 levels and was active throughout the session, protecting those levels,” said a dealer at a private sector bank.
“Risks are mounting from the tariff uncertainties, driving funds into safe havens. We expect higher volatility in the coming days, with the rupee likely weakening further,” the dealer added.
With the constant pressure from foreign outflows and geo-political uncertainties, market participants expect the rupee to touch 92 in a short period. “Rupee has a strong depreciation bias due to recent events.
The dollar liquidity support from the RBI can only keep it stable and I expect the central bank to provide that at 91 levels, considering the depreciation that we already have. However, the currency will move towards 92 if geopolitical tensions further escalates,” said Alok Singh, treasury head, CSB Bank.
According to Anindya Banerjee, head of currency and commodity research at Kotak Securities, negative flows, combined with global uncertainties, intensified selling pressure and prompting shorts. “Exporters delay hedging or dollar conversions amid rising prices, curbing dollar supply.
In the short-term, foreign outflows will prevail, putting constant pressure on the currency.” Banerjee sees the rupee nearing 92 soon and trading in the 90-91 in the short-term.