The Indian rupee hit a fresh record low on Friday, January 23, amid strong demand for the US dollar from corporates and importers, along with persistent selling by foreign portfolio investors, and prevailing geopolitical uncertainty.

The rupee slipped to 91.99, slipping past the previous record low of 91.7425 hit on Wednesday. Meanwhile, from its last closing price of 91.41 on Thursday, the domestic unit slumped 0.63%.

A PTI report, quoting forex traders, said the Reserve Bank of India intervention is helping smooth volatility to some extent, but is not reversing the overall negative trend for the domestic unit. The rupee has fallen over 2% in January, adding to its 5% slide in 2025.

What’s driving rupee lower?

Analysts believe consistent foreign investor outflows are a key vulnerability for the currency. Foreign portfolio investors (FPIs) have offloaded Indian stocks worth ₹31,334 crore so far in January, the highest such monthly selloff since August last year, showed NSDL data.

This relentless selling is also pressurising the Indian equity markets, with the flagship Nifty 50 index down 4% this month.

While exporters may benefit from improved competitiveness, a weaker rupee gradually feeds into higher costs for fuel, travel and imported goods, impacting households and businesses alike, said Akshat Garg, Head – Research & Product of Choice Wealth.

“The key challenge for policymakers is to manage volatility without overreacting. With adequate forex buffers and calibrated intervention, the move appears more sentiment-driven than a signal of structural weakness,” he said earlier this week.

(This is a developing story. Check back for updates.)

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