Rupee slumps to fresh low of 91.39/$ amid persistent foreign fund outflow

The Indian currency fell 41 paise to a fresh low of 91.39 against the US dollar on Wednesday

The Indian rupee slumped to a new low of 91.39 against the US dollar on Wednesday amid persistent global fund outflow from domestic equity markets. The domestic currency fell 41 paise to a fresh low of 91.39 against the greenback.  The rupee settled at 90.98 on Tuesday, according to data on Bloomberg. 

 

The rupee has been steadily declining for nine consecutive sessions as geopolitical tensions and renewed trade war fears weighed on risk appetite. 

 

“Outflows from domestic equities have already been to the tune of $3.2 billion in January, 2026 till date. Flows mainly drive the USDINR pair, thus weakness may continue to persist with interim legs of intervention expected from Reserve Bank of India (RBI) in case of excess volatility. The broader range play for USDINR may be 90.50-92.50 a dollar levels in the near term,” said Kunal Sodhani, head, treasury, Global Trading Centre, Shinhan Bank

 

 

  Meanwhile, the dollar index, which gauges the strength of the greenback against six major currencies, was trading 0.03 per cent down at 98.62 as of 9:17 AM.  CATCH STOCK MARKET LIVE UPDATES TODAY 

Renewed trade war fears dent risk appetite.

Across the world, investors are pulling out money from equity markets as trade war fears renewed after US President Donald Trump threatened to impose a 10 per cent tariff on European Countries who opposed the move to take over Greenland. 

 

The effect was evident in the Indian domestic markets as well. So far in January, traders sold Indian equities worth ₹29,135 crore, according to data on National Securities Depository Limited.  

 

Additionally, Trump also threatened to slap a 200 percent tariff on French wine and champagne after reports stated that French President Emmanuel Macron is unwilling to join the Gaza Peace board. 

 

Meanwhile, European leaders are planning to take punitive action as they deem tariff threats unacceptable. 

 

During times of growing tension, investors drop risky assets like emerging-market currencies and flock to safe havens like precious metals and the dollar index. 

 

Yen-carry trade unwinding

 

Indian rupee also reacts to unwinding of yen-carry trade as yields on Japanese long-dated government securities are trading at multi-decade highs amid political uncertainty. 

 

Investors unwind yen carry trades—sell emerging-markets assets, repay yen loans. Capital flows move out of emerging markets, including India, and US dollar demand rises as investors de-risk. The USDINR tends to move higher, said Sodhani. 

 

Japan is not just another bond market. For decades, it has been the world’s cheapest source of capital. When Japanese yields rise, it creates second-order effects globally, including on India’s currency, he said.  (With inputs from Agencies)