Rupee slips to new low vs US dollar, India mcap below $5 trillion

Nifty, Sensex fall to Oct levels as riskoff trade deepens

The rupee slid to a fresh low against the dollar on Wednesday as deteriorating global risk sentiment, fuelled by US President Donald Trump’s threats to impose tariffs on countries opposing his bid to acquire Greenland and a sharp selloff in Japanese government bonds, triggered fresh foreign outflows from emerging markets. The currency weakened as much as 0.8 per cent intraday to 91.75 per dollar and settled at 91.71, its weakest closing level, despite intervention by the Reserve Bank of India through state-owned banks, dealers said.

 

The equity markets echoed the pressure, with the benchmarks closing at their weakest levels in more than three months. The Sensex fell 271 points, or 0.33 per cent, to 81,910, while the Nifty 50 declined 0.3 per cent to 25,158. The selloff dragged the total market capitalisation of all companies listed on the BSE below the $5 trillion mark for the first time since May 9, 2025, underscoring the combined impact of falling share prices and a weakening rupee.

 

 

According to BSE data, total market valuation now stands at about ₹454 trillion ($4.95 trillion), down ₹27 trillion from its January 2 peak. Roughly $342 billion has been erased so far this year as sustained foreign portfolio investor selling and subdued corporate earnings weighed on sentiment. Broader indices underperformed, with mid and smallcap stocks falling close to 1 per cent each, and the smallcap index closing at its lowest level since early May.

 

In currency markets, dealers said the rupee’s slide was driven by importer dollar demand, equity outflows and offshore buying in the non-deliverable forwards market after the currency breached its previous low of 91.09. “The RBI intervened at 91.74 per dollar. They sold around $1 billion-$2 billion. There were also some unofficial buy-sell swaps done by RBI for various tenures,” said a market participant.

 

Sameer Karyatt, executive director and head of trading at DBS Bank India, said: “The move in the rupee has been driven by demand from importers, equity outflow, and offshore buying in the NDF market as spot broke the previous high of 91.09. Given the dollar demand till month-end, we expect the rupee depreciation bias to sustain with bouts of intervention to contain volatility.”

 

The rupee is now expected to touch 92 levels soon with the RBI largely on the sidelines, said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors. “But it may come in to control the rupee levels at certain levels.”

 

Anindya Banerjee, head of commodity and currency research at Kotak Securities, however, noted that RBI intervention is only helping smooth volatility but is not reversing the trend.

 

Foreign investors have withdrawn about $2.7 billion from Indian equities so far in January, adding to nearly $19 billion of outflows in 2025. The rupee has now weakened 6.8 per cent in the current financial year, making it the worst-performing Asian currency over the period despite a modest pullback in the dollar index.

 

Market participants said the global backdrop remains a key headwind. Rising Japanese government bond yields have forced the unwinding of yen carry trades, long a source of cheap funding for global investors, leading to broader emerging market outflows and renewed demand for dollars.

 

“Japan has long been the cheapest source of global capital. Rising JGB yields are now forcing unwind of yen carry trades, leading to EM outflows, higher USD demand, and pressure on the rupee,” said Kunal Sodhani, head of treasury at Shinhan Bank India.

 

Equity investors, meanwhile, remain wary amid ongoing earnings disappointments and uncertainty over progress on an India-US trade agreement. Heavyweight banks led the decline on Wednesday. ICICI Bank fell 2 per cent after missing earnings estimates, while HDFC Bank slipped 1.2 per cent, together accounting for the entire fall in the benchmark indices. Investors remain cautious amid earnings disappointments and uncertainty over progress on a potential India–US trade agreement.

 

Global markets were mixed, and moves across global assets were relatively subdued following the sharp cross-asset selloff earlier in the week, offering limited relief to Indian assets facing persistent domestic and external pressures.