Rupee falls to new low of 91.96 per dollar due to sustained FPI outflow

The rupee fell to a new low of 91.96 per dollar on Friday due to sustained foreign outflows coupled with dollar demand among importers, dealers said. The local currency was the worst-performing Asian currency on Friday, with a depreciation of 0.36 per cent. It had settled at 91.62 per dollar on Thursday

“We might see the rupee breaching 93 per dollar soon because of FPI outflows and dollar demand from importers,” said a dealer at a state-owned bank. “The RBI has been intervening in both the forwards and spot markets, but in small amounts,” he added. 

Market participants said exporters are staying cautious as trade talks remain stalled, reducing dollar inflows. At the same time, continued FII outflows, selling in equity markets and a widening current account deficit are putting pressure on the rupee. 

“While the US dollar is not particularly strong globally, the rupee’s underperformance stands out. The RBI has the capacity to intervene, as seen in prior episodes, but its recent restraint suggests a clear policy choice — supporting growth over aggressively defending the currency,” said Abhishek Goenka, founder and chief executive officer of IFA Global. “At current levels, the rupee appears 3 per cent to 4 per cent undervalued, but valuation alone will not arrest the move,” he added. 

The dollar index remained steady at 98.37, against the previous close of 98.33. It measures the strength of the greenback against a basket of six major currencies

As of December 2025, the real effective exchange rate (REER) of the Indian rupee stood at 95.30, against 97.52 in November 2025.

The REER adjusts the nominal effective exchange rate (NEER) to account for inflation differentials between India and its major trading partners. A REER value above 100 indicates an appreciation of the rupee relative to the base year, potentially making Indian exports less competitive in global markets.

“The rupee looks further vulnerable towards 93 per dollar levels as FPIs continue to buy dollars, while importers who are panicked have also been buying, with no forward export sales as exporters hold dollars expecting a further fall,” said Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP.

The rupee has depreciated by 7.05 per cent in the current financial year so far, while in the current calendar year it has witnessed a depreciation of 2.26 per cent against the greenback.