The Indian rupee breached the 91-a-dollar mark for the second time in a month before closing 14 paise lower at 90.92 against the US dollar on Monday. The currency decline was attributed to renewed concerns over global trade uncertainties and accelerated foreign fund withdrawals from domestic markets.

Currency Performance and Market Dynamics

Despite favorable external conditions including a weak American currency and lower crude oil prices, the rupee faced significant selling pressure from domestic equity markets. At the interbank foreign exchange, the rupee opened at 90.68 and slid past the crucial 91.01 level during the trading session before settling at 90.92 (provisional).

The rupee's current closing level stands just 1 paise above its record low closing level. On December 16, 2025, the currency had reached its lowest intraday level of 91.14 and its lowest closing level of 90.93 against the American currency.

Recent Performance Trend

The Monday decline marked the fourth consecutive session of rupee weakness. On Friday, the rupee had crashed 44 paise to settle near its lowest level at 90.78 against the US dollar, following a 17 paise loss in the preceding two sessions.

Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan, noted that the rupee drifted lower amid persistent FII outflows and weak domestic markets. Dollar demand from corporates and hedgers further pressured the currency during the trading session.

Global Market Factors

Investors expressed concerns after US President Donald Trump announced tariffs on European countries if they resisted his plan to control Greenland. This development added to the global trade uncertainty that has been weighing on emerging market currencies.

Market Outlook

Choudhary projected that the rupee is expected to trade with a negative bias amid risk aversion in global markets and brewing geopolitical tensions between the US and European nations over control of Greenland. He indicated that FII outflows and uncertainty over trade deal talks may continue to pressure the rupee.

However, he noted that a weak dollar and easing tensions between the US and Iran may provide support to the rupee at lower levels. The analyst projected the USD-INR spot price to trade in a range of ₹90.60 to ₹91.30.

Foreign Investment Flows

Foreign institutional investors continued their selling spree, offloading equities worth ₹4,346.13 crore on Friday according to exchange data. This persistent outflow has been a key factor contributing to the rupee's weakness over recent sessions, despite relatively favorable global conditions for emerging market currencies.

The Indian Rupee extended its losing streak for the fourth consecutive session on Monday, closing at 90.91 per dollar amid persistent corporate dollar demand and supply constraints. The currency's decline came despite early gains that saw it appreciate to 90.64 in morning trade.

Currency Performance and Market Dynamics

The rupee's trading session highlighted the current challenges facing the local currency. After opening stronger at 90.64 following U.S. dollar weakness, the currency reversed course and approached the psychologically important 91.00 level before settling lower.

Traders reported that the Reserve Bank of India intervened mildly during the session to prevent further deterioration in the currency's value as it neared the 91.00 mark.

Technical Levels and Market Outlook

The rupee has now breached the critical support zone of 90.30-90.50, raising concerns about further weakness. According to Amit Pabari, Managing Director at CR Forex, the all-time high of 91.07 represents the next major level to monitor for the currency.

"Risk-off sentiment is rarely friendly to emerging markets. As investors turn cautious, capital tends to move out of riskier assets. The rupee, already under pressure, may feel added strain and simply put, when the world feels uneasy, emerging market currencies often bear the cost," Pabari explained.

Factors Influencing Currency Movement

Several factors contributed to the rupee's performance during the session:

• Corporate Dollar Demand: Persistent buying pressure from corporates seeking dollars
• Supply Shortfall: Limited dollar supply in the domestic market
• Global Risk Sentiment: Cautious investor approach affecting emerging market currencies
• Equity Outflows: Foreign investors have withdrawn over $2.50 billion from Indian stocks in January

The currency initially found support from U.S. dollar weakness against major peers and Asian currencies, as investors reduced dollar exposure amid mounting tensions over Greenland and threats of U.S. tariffs on European nations.

Market Balance and Recovery Challenges

The rupee's inability to sustain its opening gains underscores the current imbalance in the foreign exchange market. Any recovery attempts are being consistently offset by corporate dollar demand and the overall lack of supply, creating a challenging environment for the local currency.

The continued outflows from equity markets have further dampened sentiment, with foreign institutional investors maintaining their selling stance in Indian stocks throughout January. This combination of factors suggests that the rupee may continue to face headwinds in the near term, particularly if global risk sentiment remains subdued.