Rupee Hits Record Low: Falls to 91.28 Against US Dollar Amid Market Turmoil

A new low for rupee! Currency falls 31 paise to 91.28 against US dollar

It’s official: the Indian rupee has hit a new historic low. On Wednesday, January 21, 2026, the domestic currency tumbled to **91.28 against the US dollar**—a drop of 31 paise from the previous close. This isn’t just another blip on the forex chart; it’s a stark signal of mounting pressure on India’s economic stability, fueled by a perfect storm of global and domestic forces.

For everyday Indians, this means more than abstract financial news. A weaker rupee makes imports—from crude oil to smartphones—more expensive, stokes inflation, and can erode purchasing power. But what’s really driving this sharp decline? And is there a bottom in sight?

Table of Contents

Why the Rupee Falls to 91.28: The Key Drivers

The latest slide in the rupee isn’t happening in a vacuum. Three major factors are converging to create sustained downward pressure:

  1. Strong Dollar Demand from Importers: Metal and oil importers are rushing to buy dollars to hedge against future price hikes, especially as global commodity prices remain volatile. This spikes immediate demand for the greenback, pushing the rupee lower.
  2. Continued Foreign Fund Outflows: Foreign portfolio investors (FPIs) have been pulling money out of Indian equities and bonds for weeks. In January alone, net outflows exceeded $1.2 billion . When dollars leave the country, the local currency supply shrinks relative to demand—depreciation follows.
  3. Geopolitical Uncertainty: Escalating tensions in the Middle East and renewed volatility in European markets are making global investors flock to the safety of the US dollar—a classic “risk-off” move that hurts emerging market currencies like the rupee.

Compounding these issues is the sluggish performance of India’s domestic stock market. The Sensex and Nifty have struggled to gain momentum, reducing investor confidence and further encouraging capital flight.

Impact on Indian Economy and Consumers

A depreciating rupee has wide-ranging consequences:

  • Inflation Risk: Since India imports over 85% of its crude oil, a weaker rupee directly increases fuel costs—which ripple through transport, logistics, and eventually, grocery prices.
  • Corporate Stress: Companies with high dollar-denominated debt (like airlines and infrastructure firms) face higher repayment burdens.
  • Travel & Education Costs: Students planning to study abroad or families booking international trips will see their expenses rise overnight.
  • Export Boost (Silver Lining): On the flip side, sectors like IT, pharma, and textiles benefit as their services and goods become cheaper for foreign buyers.

However, the net effect is often negative in the short term, especially if depreciation is rapid and uncontrolled.

Rupee falls: The Global Context

This isn’t just an India problem. Across Asia, emerging market currencies are under pressure. The Japanese yen, South Korean won, and Thai baht have all weakened against the dollar in recent weeks .

Why? The U.S. Federal Reserve has signaled it may delay interest rate cuts in 2026 due to persistent inflation. Higher U.S. rates make dollar assets more attractive, drawing capital away from riskier markets like India. As long as the Fed holds rates steady—or even hikes again—the dollar’s strength is likely to persist, keeping pressure on the rupee.

What the Reserve Bank Can (and Can’t) Do

The Reserve Bank of India (RBI) isn’t sitting idle. It has been actively intervening in the forex market by selling dollars from its reserves to cushion the rupee’s fall. India’s forex reserves, currently around $640 billion, provide a strong buffer .

But there are limits. Overusing reserves can deplete them quickly, and excessive intervention might attract criticism from global bodies like the IMF for “manipulating” the currency. The RBI’s preferred strategy is a calibrated, “orderly” depreciation—not a free fall.

Other tools include hiking interest rates (which could hurt growth) or imposing capital controls (which deter foreign investment). So far, the RBI is walking a tightrope—supporting the rupee without spooking markets.

Outlook for the Rupee in 2026

Most analysts expect the rupee to remain under pressure in the first half of 2026. Forecasts from major banks range between 91.50 and 93.00 by mid-year, depending on:

  • Global oil prices
  • Fed’s monetary policy decisions
  • India’s current account deficit (projected at 2.1% of GDP in FY26)
  • Election-related market sentiment

However, if FPI inflows resume—perhaps after clarity on U.S. rate cuts or strong Indian corporate earnings—the rupee could stabilize or even rebound.

Conclusion

The rupee falls to 91.28 is more than a record—it’s a warning sign. While India’s macroeconomic fundamentals remain relatively strong compared to other emerging economies, external headwinds are intensifying. For policymakers, the challenge is clear: balance short-term currency defense with long-term economic resilience. For citizens, it’s a reminder to stay informed, hedge where possible, and prepare for a period of elevated import costs. In a globalized economy, even the strongest nations aren’t immune to the tides of forex markets.

Sources

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