The Indian rupee extended its decline for a fifth consecutive trading session on Tuesday, closing at 90.9750 per dollar as persistent dollar demand continued to weigh on the currency. The unit opened weaker and rapidly fell to 91.0525, marking its lowest level in a month and moving dangerously close to the all-time low of 91.0750 recorded in mid-December.

Currency Performance and RBI Intervention

The rupee's recent performance reflects mounting pressure from multiple fronts:

Traders reported that state-run banks likely sold dollars near the 91.00 rupee level on behalf of the Reserve Bank of India, effectively pulling the currency back from record territory. This intervention pattern has been consistent, with bankers noting mild RBI action on both Friday and Monday sessions.

Market Dynamics and Trader Sentiment

"Despite genuine outflow pressure, the RBI held fort forcing dollar longs to pull back their bets," explained a trader with a state-run bank. The central bank's defensive stance suggests a clear reluctance to allow the rupee to breach its historical low, at least in the near term.

Sameer Karyatt, executive director and head of trading at DBS Bank India, highlighted the broader factors at play: "Continued global uncertainties, including U.S. pressure on Greenland, have led to a risk-off sentiment. This, along with strong offshore hedging in USD/INR, has led to a test of 91 levels."

Global Factors and Outlook

The rupee's weakness has been exacerbated by escalating tensions between the United States and European Union. Trump's threats to rekindle a trade war with Europe over Greenland's future have contributed to global market uncertainty and risk-aversion among investors.

Key pressure points include:

• Strong offshore hedging activity in USD/INR
• Risk-off sentiment from geopolitical tensions
• Persistent dollar demand in domestic markets
• Global uncertainty stemming from U.S.-Europe diplomatic friction

Karyatt expects the rupee to remain under depreciating pressure going forward, while bankers anticipate the RBI will continue defending the record low unless new global factors emerge to intensify selling pressure on the currency.

The Indian rupee depreciated 7 paise to close at a record low of 90.97 against the US dollar on Tuesday, marking another milestone in the currency's ongoing weakness. Strong dollar demand from metal importers and persistent foreign fund outflows dented investor sentiment, pushing the local unit to new lows.

Currency Performance and Trading Range

At the interbank foreign exchange market, the rupee opened at 90.91 and lost ground throughout the session. The currency touched an intraday low of 91.06 before recovering to close at 90.97 against the American currency.

On Monday, the rupee had depreciated by 12 paise to close at 90.90 against the greenback. The currency's previous lowest closing level was 90.93, recorded on December 16, 2025, when it also reached an intraday low of 91.14.

Market Pressures and Analysis

Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan, noted that the Indian rupee traded with a negative bias and slipped below the 91-mark due to risk aversion in global markets and persistent foreign institutional investor outflows. However, he highlighted that a weak dollar and intervention by the RBI prevented a sharp fall.

Forex traders attributed the rupee's weakness to several factors:

• Rising geopolitical uncertainties, including renewed US expansionary signals
• Increased risk aversion keeping emerging market currencies under pressure
• Sluggish domestic stock market triggered by foreign capital exodus
• Strong dollar demand from metal importers

Global Market Context

The dollar index, which measures the greenback's strength against a basket of six currencies, was trading 0.91% lower at 98.48. Despite this weakness in the dollar, the rupee continued to face pressure from domestic factors.

Brent crude, the global oil benchmark, was trading at $63.94 per barrel in futures trade, providing some context for commodity market movements.

Domestic Equity Market Impact

The domestic equity market reflected the broader risk-off sentiment, with significant declines across major indices:

Foreign institutional investors continued their selling spree, offloading equities worth ₹3,262.82 crore on Monday, according to exchange data.

Outlook and Expectations

Choudhary expects the rupee to continue trading with a negative bias due to foreign fund outflows and risk aversion in global markets, particularly over the US stance on Greenland. Uncertainty over trade deal talks may also pressure the rupee further. However, he noted that a weak dollar and any RBI intervention may provide support at lower levels, with the USD-INR spot price expected to trade in a range of 90.70 to 91.25.