The Indian rupee opened slightly stronger on Tuesday, recovering 8 paise from an all-time low to trade at 91.82 against the US dollar, or 25.01907 against the UAE dirham, after a volatile week that pushed the currency close to the 92-per-dollar mark for the first time.
Despite the marginal rebound, the rupee remains under significant pressure after falling 1.18 per cent last week, weighed down by persistent foreign equity outflows and broader global market uncertainty. According to market data, overseas investors have pulled nearly $4 billion from Indian equities in January, adding strain to the currency.
Currency traders say the recent weakness has come even as the Reserve Bank of India (RBI) continues to intervene in the foreign exchange market. Rather than defending a specific exchange rate, the central bank is believed to be supplying US dollars at multiple levels to smooth volatility and prevent disorderly moves.
Market participants note that the RBI’s strategy reflects a preference for gradual adjustment rather than aggressive defence, allowing the rupee to respond to market forces while limiting sharp swings. This approach has been used during previous periods of global stress, particularly when capital outflows accelerate.
The rupee’s decline has also coincided with a stronger US dollar globally, driven by expectations that US interest rates may remain higher for longer. Rising US bond yields and risk aversion have prompted investors to shift funds away from emerging markets, placing additional pressure on currencies such as the rupee.
Analysts say near-term movement in the rupee will depend on foreign investment flows, global risk sentiment and central bank actions. While intervention has helped slow the pace of depreciation, traders warn that sustained equity outflows could keep the currency vulnerable.
For Indian businesses and overseas remitters, the weaker rupee has mixed implications, benefiting exporters while increasing import and overseas travel costs. Markets will continue to watch RBI actions closely as the currency navigates record-low territory.
