The Indian rupee continued its downward trajectory on Tuesday, weakening to 91.03 per dollar and crossing the psychologically important 91-mark. This decline reflects ongoing pressure from foreign portfolio investor selling and renewed concerns over global trade tensions that have weighed heavily on market sentiment.

Currency Performance Details

The rupee's movement past the 91-per-dollar level represents a significant psychological barrier being breached. The specific exchange rate data shows the currency's vulnerability to external factors.

Market Pressures

The domestic currency faced dual pressures that contributed to its weakness. Foreign portfolio investor selling activity has remained persistent, creating sustained downward pressure on the rupee. Additionally, renewed global trade tensions have added to the challenging environment, further eroding investor confidence and market sentiment.

The combination of these factors has created a challenging backdrop for the Indian currency, with the breach of the 91-level marking a notable development in the rupee's recent performance against the dollar.

The Indian rupee weakened 8 paise to 90.98 against the US dollar in early trade on Tuesday, as strong dollar demand from metal importers and persistent foreign fund outflows weighed on investor sentiment. The currency's decline reflects broader pressure on emerging market currencies amid rising geopolitical uncertainty and risk aversion.

Currency Performance and Market Dynamics

At the interbank foreign exchange market, the rupee opened at 90.91 before losing ground to trade at 90.98 against the greenback. This represents an 8 paise decline from its previous close of 90.90, which itself was down 12 paise from the prior session.

The rupee's recent performance has been concerning, with the currency trading near its record lows. On December 16, 2025, the rupee reached its lowest intra-day level of 91.14 and its lowest closing level of 90.93 against the American currency.

Foreign Investment Outflows Impact

Foreign institutional investors have significantly impacted rupee performance through sustained equity outflows. According to exchange data, FIIs offloaded equities worth ₹3,262.82 crores on Monday alone. More broadly, foreign investors have withdrawn more than $3 billion from Indian equities in January, making the rupee increasingly sensitive to dollar demand.

"Foreign investors have withdrawn more than USD 3 billion from Indian equities so far in January, and the steady outflow has made the rupee increasingly sensitive to even modest dollar demand. With capital moving out, stability becomes harder to defend," said Amit Pabari, MD of CR Forex Advisors.

Global Market Factors

Rising geopolitical uncertainty, including renewed US expansionary signals, has increased risk aversion globally. "The US Supreme Court will be giving a decision on the legality of the Trump Tariffs, which will affect the world markets directly. Presently, all the markets are in risk-off mode with Gold and Silver getting bought as safe havens," explained Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.

Domestic Equity Market Performance

The sluggish domestic stock market has been triggered by the exodus of foreign capital. In early trade, both major indices declined significantly:

Technical Outlook

Pabari noted that ongoing global uncertainty, combined with a sustained break above 91.07, could pave the way for a move toward the 91.70–92.00 zone, unless offset by active intervention from the RBI. On the downside, any corrective move is likely to find initial support in the 90.30–90.50 range.

The combination of persistent foreign fund outflows, strong dollar demand from importers, and global risk-off sentiment continues to challenge the rupee's stability in the near term.