MUMBAI: The rupee extended losses to the fifth consecutive session Tuesday breaching the sensitive 91-mark for the second time as strong dollar demand continued to put pressure on the currency, while a fresh low was averted after likely RBI intervention.
The currency opened a tad weaker and rapidly declined to 91.0525, its lowest level in a month, and drifted closer to its all-time low of 91.0750 set on December 16 last. The bleeding unit finally ended the day at 90.9750, down 0.1% from 90.91 at Monday's close. The unit has lost around 1% in just five sessions.
Selling pressure remained elevated throughout the trading day. As of the last check at 2 pm, the currency was hovering at 90.96, struggling to recover lost ground. This level recalls significant volatility from late last year, as the rupee had breached the 91 mark for the first time on December 16, 2025.
Traders said state-run banks likely sold dollars near the 91 level, likely on behalf of the Reserve Bank, helping it pullback from near record lows and close with marginal loss. Private sector bankers said the RBI also mildly intervened on Friday and Monday, and it appeared that the central bank did not want the rupee to breach its record low, at least on Tuesday.
The rupee’ weakness is manifold such as the continuing selloff by foreigners in the equity markets, growing tension between the US and European Union on the Greenland issue, bleeding domestic market and the month-end dollar demands from exporters are some of the reasons for the continuing pressure on the rupee, which closed 2025 with over 5% loss becoming the worst in Asia and the third worst globally after the Turkish lira and the Argentinian peso which have lost more than 50% each, according to traders.
"Continued global uncertainties, including US pressure on Greenland, have led to a risk-off sentiment. This, along with strong offshore hedging in the rupee-dollar pair, has led to a test of 91 levels," said Sameer Karyatt, executive director and head of trading at DBS Bank India, while talking to TNIE.
He expects the rupee to remain under depreciating pressure given the current macro-environment, but did not offer a near term level.According to forex market watchers, the current rupee depreciation is being fuelled by a "perfect storm" of domestic and international factors. Renewed threats of tariffs by the US-- specifically targeting European nations over a dispute regarding Greenland -- have triggered a global "risk-off" sentiment, they said.
“The US Supreme Court will be giving a decision on the legality of the Trump tariffs, which will affect the world markets directly. At present, all the markets are in risk-off mode with gold and silver getting bought as safe havens," said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors.
Back home, the most immediate pressure on the rupee is coming from a sustained FPI selling of equities. FPIs have been net sellers in the market for months. As of January 19, they have ripped off equities worth over Rs 29,315 crore. This is on top of the over $18 billion selloff last year.
"The ongoing global uncertainty, combined with a sustained break above 91.07, could pave the way for a move toward the 91.70-92 zone, unless offset by active RBI intervention. On the downside, any corrective move is likely to find initial support in the 90.30-90.50 range," said Amit Pabari of CR Forex Advisors.