Rupee hits all-time low at Rs 91.95 against USD: Here’s why Indian currency keeps dropping against Dollar

The Indian rupee tumbled to an all-time low of 91.95 against the US dollar on January 23, extending a worrying trend for the currency. The slide comes amid selling pressure in local equities, sustained demand for dollars from importers, and speculative flows, leaving investors and businesses cautious.

Market participants say the rupee has been struggling to stabilize, with volatility likely to continue unless foreign inflows improve.

Equity Selloff Adds Pressure

The rupee’s fall coincides with significant pressure in Indian equity markets. The Nifty 50 index has dropped nearly 5% in January, with this week alone seeing a decline of more than 3%. Investors have been pulling out funds from equities, with foreign investors withdrawing about $3.5 billion so far this month.

A sharp selloff in Adani group shares also contributed to market turbulence. On Friday, the benchmark index fell 0.8%, after the US Securities and Exchange Commission (SEC) requested court permission to personally email summons to billionaire Gautam Adani.

“The Adani issue has added another reason for the market to buy dollars,” said Anil Bhansali, head of treasury at Finrex Treasury Advisors. “You can see the pressure in the way buying keeps coming in at all levels.”

Heavy Import and Speculative Dollar Demand

Analysts said ongoing dollar demand from bullion, other importers, and speculative trading by offshore investors has amplified pressure on the rupee. The currency has now lost more than 2% this month, following a 5% slide in 2025, highlighting continued vulnerability.

Economists pointed out that capital flows remain a critical factor affecting the rupee. Last year, portfolio equity outflows hit a record $18.9 billion, while inflows through external commercial borrowings remained muted.

RBI Intervention Provides Temporary Relief

The Reserve Bank of India (RBI) has repeatedly intervened in the currency markets to support the rupee. Officials have sold dollars aggressively, including on at least two occasions this week. Market experts say the interventions have slowed the decline but have not reversed the currency’s downward trend.

With global factors such as foreign outflows and US dollar strength continuing to influence the market, the rupee may remain under pressure in the near term. Investors and businesses are being advised to monitor currency fluctuations closely, especially amid persistent equity volatility and ongoing capital movements.