Another day, another low for Re against $ amid turbulence -

MUMBAI: The rupee on Wednesday closed at 91.70 against the dollar, down 72 paise from Tuesday’s close of 90.98, as global bond market weakness, geopolitical tensions and persistent capital outflows weighed on sentiment, pushing the currency to a fresh all-time intraday low of 91.74.The currency weakened steadily through the session, marking its sixth consecutive day of losses and the sharpest single-day fall in nearly two months. The rupee has declined about 2% so far this month. Dealers said that RBI intervention was intermittent and was not seen defending any particular level.A global bond selloff amid US and European Union tensions kept risk appetite weak and raised concerns over capital outflows, while the absence of dollar supply support in the market added to downward pressure. Economist Madan Sabnavis of Bank of Baroda said the rupee has depreciated about 7% in a year, well above the 10-year average fall of 3.1%. The current situation is unusual for the RBI as their spot dollar sales directly affect liquidity, prompting the RBI to rely on buy-sell swaps instead.

“With geopolitical issues deteriorating and no sign of any rollback in US tariffs on India’s exports-rather, talk of an additional 25% levy linked to trade with Iran-the rupee will remain under pressure. At the same time, foreign investors have continued to sell Indian equities, with net outflows of about $3.5 billion in Jan. In these circumstances, the rupee is unlikely to strengthen meaningfully except through RBI intervention,” said K N Dey a forex consultant.Meanwhile RBI data showed it eased forex intervention in Nov 2025, trimming net spot dollar sales to $9.7 billion compared to $11.8 billion in Oct. Despite such high sales, rising gold valuations have cushioned the hit to reserves. In Nov RBI spot operations saw $14.4 billion in purchases against $24.1 billion in sales, yielding net sales of $9.7 billion, or Rs 85,402 crore, at an implied rate of ~Rs 87.9 a dollar.“The positive consequence of the rupee’s movement is the export advantage at a time when we still face a 50% tariff in the USA. However, continued depreciation also increases uncertainty for corporates and can lead to greater caution,” said Sabnavis.Market participants said persistent equity outflows and stronger hedging demand from importers, amid expectations of further depreciation, continued to weigh on the currency. While India’s current account deficit remains manageable, weak capital inflows have left the rupee vulnerable to external shocks.Indian equities fell 0.3% on the day, extending losses after their steepest drop in more than eight months in the previous session. Foreign investors have pulled out about $3 billion from Indian equities so far in Jan, following record outflows of nearly $19 billion in 2025.