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

Market participants said exporters are staying cautious as trade talks remain stalled, reducing dollar inflows

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

 

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

 

Market participants said that exporters are staying cautious as trade talks remain stalled, reducing dollar inflows. At the same time, continued foreign institutional investor (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- support growth over aggressively defending the currency,” said Abhishek Goenka, founder and chief executive officer, IFA Global. “At current levels, the Rupee appears 3 -4 per cent undervalued, but valuation alone won’t arrest the move,” he added.

 

Dollar index remained steady at 98.37, against 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 foreign portfolio investments (FPIs) continue to buy dollars while importers have also been buying with no forward exports sale as exporters hold dollars expecting 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, whereas in the current calendar year, it has witnessed 2.26 per cent depreciation against the greenback.