India Rupee Falls to Fresh Record Low Amid Strong US Dollar Demand

On Friday, January 23, the Indian rupee tumbled to a new record low, driven by rising demand for the US dollar and sustained selling pressure in the markets. Investors and businesses alike are closely watching the domestic currency as it navigates through one of its most challenging phases in recent months.

Market Performance

• The rupee fell to 91.99 in intraday trade, surpassing the previous record low of 91.7425 recorded earlier this week.
• From its last closing price of 91.41 on Thursday, the currency slipped 0.63% in a single session.
• The domestic unit finally settled at 91.93 (provisional) against the US dollar — marking its new all-time low.

The decline comes amid strong demand for dollars from corporates and importers, combined with consistent selling pressure from foreign investors.

Factors Behind the Fall

Several market dynamics contributed to the rupee’s slide this month:

• Foreign portfolio investor (FPI) outflows: Indian equities have witnessed significant capital exits. FPIs have offloaded ₹31,334 crore worth of Indian stocks in January alone, marking the largest monthly selloff since August last year.
• Pressure on equity markets: The selling pressure translated into losses in domestic indices. The BSE Sensex lost 770 points (0.94%), closing at 81,537, while the Nifty 50 fell 241 points (0.95%), ending at 25,049.
• Global uncertainties: Ongoing geopolitical tensions and global economic concerns have heightened caution among traders, keeping the rupee under stress.

In total, the rupee has lost over 2% in January, adding to its 5% decline in 2025. For the week, the currency recorded its largest fall in six months, with a 1.2% weekly drop according to Reuters data.

Company & Corporate Impact

While exporters may find some relief from a weaker rupee, the decline has wider implications for businesses and households:

• Rising costs: Import-dependent companies face higher bills for fuel, machinery, and raw materials.
• Travel expenses: International travel and education costs increase for Indian consumers.
• Corporate hedging: Businesses holding dollar-denominated debt may see increased repayment costs.

Summary of the Situation

The rupee’s fall to 91.93 against the US dollar marks a fresh milestone in a challenging year for the domestic currency. Key points to note:

• Intraday low: 91.99, surpassing previous record.
• Monthly FPI outflows: ₹31,334 crore in January.
• January decline: over 2%, contributing to a 5% slide in 2025.
• Weekly loss: 1.2%, largest in six months.
• Major indices affected: Sensex down 770 points, Nifty 50 down 241 points.

The current trend highlights the impact of strong US dollar demand, persistent foreign selling, and global market uncertainty on India’s currency markets.

Source: Livemint