Mumbai: The Indian rupee on Tuesday depreciated to a historic low, closing at 90.49 against the US dollar, marking its weakest level ever. The currency declined by 17 paise from its previous close, reflecting sustained pressure from global and domestic factors that have strengthened the dollar and dampened investor sentiment toward emerging markets.
Market participants attributed the sharp fall primarily to strong demand for the US dollar, ongoing foreign institutional investor outflows, and rising global crude oil prices. These factors combined to increase pressure on the rupee, particularly as India remains a major importer of crude oil, making the currency sensitive to fluctuations in energy prices.
Currency analysts said uncertainty in global financial markets has supported the dollar, with investors closely watching signals related to US interest rate policy. Expectations that US interest rates may remain higher for longer have boosted the dollar’s appeal, leading to weakness across several emerging market currencies, including the rupee.
Traders noted that importers stepped up dollar purchases, adding to near-term demand and further weighing on the domestic unit. At the same time, cautious sentiment among investors limited risk-taking, reducing the likelihood of immediate foreign capital inflows that could have supported the rupee.
Foreign fund outflows continued to play a significant role in the currency’s decline. As global investors reassessed risk exposure amid uncertain economic cues, capital movement away from emerging markets intensified, placing additional strain on the rupee’s valuation.
Rising crude oil prices also contributed to the weakness. Higher oil prices typically increase India’s import bill, widening concerns around the current account and increasing demand for dollars in the local market. This dynamic has historically exerted downward pressure on the rupee during periods of elevated energy costs.
Market experts said the near-term outlook for the rupee remains cautious unless there is an improvement in global conditions or a revival in foreign capital inflows. Stability in crude oil prices and clearer direction from major central banks, particularly the US Federal Reserve, could provide some relief to the currency.
Currency traders added that intervention by the Reserve Bank of India (RBI) may help curb excessive volatility. While the central bank has not commented on specific levels, it has historically acted to smooth sharp movements in the exchange rate rather than target a particular value.
Despite the current weakness, analysts pointed out that the rupee’s trajectory will largely depend on external cues, including global risk appetite, commodity prices, and monetary policy developments in advanced economies. Until these factors turn more supportive, the currency may continue to face pressure in the near term.
