Rupee Plunges to All-Time Closing Low of 91.99 Against US Dollar
The Indian rupee settled at its historic closing low of 91.99 against the US dollar on Wednesday, marking a significant depreciation milestone for the domestic currency. This decline occurred despite some supportive factors in the market, highlighting the overwhelming pressure from foreign fund outflows and global risk aversion sentiment.
Intraday Volatility and Key Drivers
At the interbank foreign exchange market, the rupee opened at 91.95 and initially showed strength, reaching an early high of 91.82. However, this momentum quickly faded as geopolitical uncertainty and sustained foreign portfolio outflows pushed the currency downward. The rupee touched an intraday low of 92 against the greenback before eventually closing flat at the record low of 91.99.
This represents a continuation of recent weakness, as the rupee had already slipped 31 paise on Wednesday to revisit its lowest-ever closing level. The previous intraday low of 92 was recorded on January 23, making this session particularly significant for currency traders and market observers.
Multiple Factors Weighing on the Currency
Forex traders identified several key factors contributing to the rupee's decline:
- Persistent foreign fund selling that has created sustained pressure on the currency
- Elevated global uncertainty and risk-off sentiment in international markets
- Geopolitical tensions that have increased market volatility
- Earlier surge in crude oil prices during the session that weighed on sentiment
Interestingly, the rupee's decline occurred despite some supportive factors. Softer crude prices and a weaker dollar offered limited relief, but couldn't offset the broader negative sentiment. The dollar index, which tracks the greenback against a basket of six major currencies, was trading 0.07% lower at 96.37, while Brent crude, the global oil benchmark, fell 1.83% to USD 69.64 per barrel in futures trade.
Expert Analysis and Market Perspectives
Akshat Garg, Head of Research & Product at Choice Wealth, provided detailed insights into the situation. "Persistent dollar strength, elevated US bond yields, and continued foreign portfolio outflows have collectively kept emerging market currencies under stress, with the rupee being no exception," he explained.
Garg noted that month-end importer demand and precautionary hedging further accentuated the currency move. He emphasized that the Reserve Bank of India is expected to intervene only to smooth excessive volatility rather than defend any specific level aggressively.
"From a medium-term perspective, India's fundamentals remain relatively resilient, supported by stable growth and manageable inflation," Garg added. "However, near-term currency direction will continue to be guided by global cues — particularly the US rate trajectory, capital flow trends and geopolitical developments."
He advised investors to view the current depreciation as part of a global realignment rather than a structural deterioration of India's economic position.
Economic Survey Highlights External Sector Risks
The currency decline coincided with Finance Minister Nirmala Sitharaman tabling the Economic Survey in Parliament. The document specifically flagged risks from the external sector and volatile capital flows, acknowledging the challenges facing the rupee.
The Economic Survey made an important observation about the currency's performance, noting that the rupee's depreciation to around 92 per dollar does not reflect India's underlying economic strength. "In other words, the rupee, therefore, is punching below its weight," the survey stated.
It further added that investor reluctance to commit funds warrants examination at a time when inflation is under control and the growth outlook remains favourable, suggesting a disconnect between economic fundamentals and currency performance.
Additional Market Analyst Views
Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, offered additional perspective on the market dynamics. "The rupee hit an all-time low amid geopolitical uncertainty and foreign outflows. Surge in crude oil prices, too, weighed on the rupee," he said.
Choudhary also noted that Finance Minister Nirmala Sitharaman's tabling of the Economic Survey highlighted concerns over risks from the external sector and foreign outflows. However, he pointed out that positive domestic markets and a weak dollar cushioned the downside to some extent.
Looking ahead, Choudhary expects the USD-INR spot to trade in the range of Rs 91.60–92.20, suggesting continued volatility in the near term.
Equity Market Performance and Foreign Investment Activity
On the domestic equity front, markets showed resilience despite currency weakness. The Sensex rose 221.69 points to settle at 82,566.37, while the Nifty ended 76.15 points higher at 25,418.90, demonstrating that equity investors maintained confidence in Indian companies.
However, foreign institutional investors continued their selling spree, offloading equities worth Rs 393.97 crore during the session according to exchange data. This foreign selling activity has been a consistent theme putting pressure on both equity and currency markets.
The divergence between equity market performance and currency weakness suggests that domestic investors are providing support to stocks while foreign investors remain cautious about emerging markets in general and India specifically amid global uncertainty.
