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The Indian rupee touched a new all-time low of 91.93 against the US dollar on Friday, January 23, as persistent corporate and importer demand for the greenback overshadowed brief recovery attempts. The currency weakened past its previous record low of 91.74, with early gains proving short-lived despite some improvement in global market conditions.

Market Dynamics and Recovery Attempts

The rupee's performance reflected mixed global cues, with investor sentiment showing marginal improvement after US President Donald Trump adopted a softer stance on tariff threats against Europe. The moderated rhetoric, particularly regarding Greenland-related trade concerns, helped ease immediate trade-war anxieties and led to a modest correction in the dollar's strength.

Forex traders noted that the reduced geopolitical tension provided temporary support to emerging market currencies, including the rupee, allowing for slight recovery from intraday lows. However, this relief proved insufficient to counter the underlying pressure from strong dollar demand in the domestic market.

Underlying Pressure Factors

Market participants identified several key factors maintaining downward pressure on the rupee. Persistent foreign portfolio outflows continue to weigh on the currency amid elevated global geopolitical uncertainty. The combination of corporate dollar requirements and ongoing investor risk aversion has created sustained demand for the US currency.

Traders highlighted the pending India-US trade agreement as a potential stabilizing factor for the rupee's future performance. "Until geopolitical risks ease and the trade deal materialises, the rupee is likely to remain vulnerable to external shocks," forex dealers stated.

Expert Analysis and Outlook

Amit Pabari, Managing Director at CR Forex Advisors, suggested that much of the global risk appears to be already reflected in the rupee's current valuation. This assessment opens possibilities for a consolidation phase and potential partial recovery if risk sentiment stabilizes in the coming period.

Pabari noted that the 92.00 level represents strong resistance for the dollar-rupee pair, while sustained Reserve Bank of India support could potentially guide the exchange rate back towards the 90.50-90.70 zone in the near term. The outlook remains contingent on global risk sentiment stabilization and continued central bank intervention measures.