Rupee Crashes to All-Time Low of 91.20 vs Dollar: FPI Selling & Global Tensions to Blame
The Indian rupee plunged to a historic low on Wednesday, dropping 23 paise to settle at 91.20 against the US dollar. This marks the currency’s weakest-ever close, extending a worrying decline that began early in 2026 when it first breached the psychologically critical 90-per-dollar barrier.
The immediate trigger is a perfect storm of relentless foreign capital flight and escalating global uncertainty, forcing investors to abandon emerging markets for safer shores.
Why the Rupee is Under Siege
Market analysts point to two dominant, interconnected pressures driving the rupee’s depreciation.
Sustained FPI Exodus: Foreign Portfolio Investors (FPIs) are leading the retreat. In just the first 20 days of January 2026, they have pulled a staggering ā¹29,315 crore from Indian equities. Every sale of Indian assets necessitates converting rupees back into dollars, creating immense demand for the greenback and simultaneous downward pressure on the rupee.
Global Risk-Off Mood: Renewed geopolitical and trade tensions are spooking markets worldwide. Fresh tariff threats from US President Donald Trump against European nations, coupled with disputes like the one over Greenland, have ignited a classic “risk-off” sentiment. In such times, global capital rushes toward safe-haven assets—primarily the US dollar and gold—at the expense of currencies like the rupee.
“This isn’t just an India-specific story,” explains simulated economist and market expert Dr. Arjun Mehta. “The dollar is strengthening globally as a shield against uncertainty. When FPIs pull out en masse from emerging markets, the ripple effect is severe. India, with its significant trade exposure, feels the pinch acutely.”
The Double-Edged Sword of a Weaker Rupee
Currency depreciation creates distinct winners and losers, impacting both the broader economy and household budgets.
Potential Benefits:
Boost for Exporters: Indian goods become cheaper for foreign buyers, potentially aiding sectors like IT, pharmaceuticals, and textiles.
Tourism & Medical Value: India becomes a more affordable destination for foreign tourists and medical patients.
Higher Remittances: Families receiving money from abroad get more rupees for every dollar sent.
Significant Drawbacks:
Imported Inflation: The cost of crucial imports like crude oil, electronics, and machinery rises, fueling inflation and putting pressure on household budgets.
Costlier Overseas Spend: Studying abroad, international travel, and online subscriptions in dollars become significantly more expensive.
Investment Concerns: Prolonged weakness can erode foreign investor confidence, potentially slowing capital inflows needed for growth.
The Road Ahead
The rupee’s trajectory will hinge heavily on the direction of global trade winds and the Reserve Bank of India’s (RBI) potential interventions to curb volatility. While a competitive rupee can stimulate exports, the prevailing sentiment is one of caution. The current climate suggests that until global tensions ease and the flight to the US dollar stabilizes, the rupee may face continued headwinds.
For the common citizen, the direct hit is to the pocket—be it at the petrol pump or when paying a child’s overseas university fee. This record low is more than a number on a screen; it’s a tangible reflection of a nervous global economy hitting home.
