Explained: Rupee Under Pressure, what’s Really Driving the Fall?

The rupee is sliding, the dollar isn’t surging and investors are confused. As the currency nears 92, capital outflows, not global strength, are driving the fall.

Here’s what’s really happening.

What’s happening to the Rupee?

The Indian Rupee has weakened sharply, slipping close to the 92-per-dollar mark—its weakest zone in recent times.

What’s the main reason for the fall?

Capital outflows. Heavy foreign investor selling is the biggest drag on the Rupee right now.

How large are these outflows?

In January alone, FIIs sold nearly ₹43,500 crore worth of Indian equities—about $4.75 billion—putting sustained pressure on the currency.

Is the strong US dollar to blame?

Surprisingly, no. The Dollar Index fell 2.3% this month, while the Rupee weakened 1.7%, showing a clear disconnect.

Has the RBI stepped in?

Yes. The Rupee briefly touched 92.00, but recovered after reports of mild RBI intervention in the forex market.

Why didn’t recent global trade deals help the Rupee?

Even the signing of the so-called “mother of all trade deals” failed to lift sentiment—highlighting how dominant capital outflows have become.

What could stabilise the Rupee next?

First, any rollback or easing of US tariffs. Second, signals from India’s Union Budget on fiscal discipline and external balance management.

What’s the Budget’s role here?

Markets are watching whether the Budget offers reassurance on fiscal prudence, capital flows, and steps to manage the current account deficit.

Are there other pressures?

Yes. Rising gold prices are inflating India’s import bill, adding another layer of stress to the Rupee.

What’s the bottom line?

Until capital flows reverse—or policy clarity emerges—the Rupee remains vulnerable.

(With inputs from ANI)