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What is the story about?
The Indian rupee opened lower on Thursday (January 29), trading near the 92-per-dollar mark for the first time, amid a broad rally in the US dollar and weakness across Asian currencies. At the open, the rupee slipped to 91.99 against the greenback, inching close to its previous all-time low of 91.96 set last week.
Why the rupee is weak
Traders say weak capital inflows and heightened market anxiety are weighing on the currency.
A Singapore-based hedge fund manager noted, “The market is pre-empting expected NDF maturities, and it’s possible a round of stop-losses has been triggered.”
The key question for markets now is whether the Reserve Bank of India (RBI) will intervene if the rupee crosses the 92 mark, or allow it to adjust further.
Global dollar strength
The US dollar has gained support from a recovery in Treasury yields, which rose after the Federal Reserve indicated inflation remains elevated and the labour market continues to stabilise.
While Fed Chair Jerome Powell did not commit to future rate cuts, analysts at Morgan Stanley said, “Further easing primarily depends on evidence of disinflation, likely to emerge later in 2026,” keeping June and September as potential dates for rate cuts.
Impact on Asia
The rupee’s slide mirrors a broader trend in Asia, where currencies across the region are under pressure from rising US yields. Investors remain cautious, balancing domestic flows with global macroeconomic signals.
What it means for the Indian economy
A weaker rupee can make imports costlier, potentially adding to inflationary pressures, while exports may gain competitiveness. Market participants will closely watch RBI actions and global developments to gauge the rupee’s trajectory in the coming days.
Why the rupee is weak
Traders say weak capital inflows and heightened market anxiety are weighing on the currency.
A Singapore-based hedge fund manager noted, “The market is pre-empting expected NDF maturities, and it’s possible a round of stop-losses has been triggered.”
The key question for markets now is whether the Reserve Bank of India (RBI) will intervene if the rupee crosses the 92 mark, or allow it to adjust further.
Global dollar strength
The US dollar has gained support from a recovery in Treasury yields, which rose after the Federal Reserve indicated inflation remains elevated and the labour market continues to stabilise.
While Fed Chair Jerome Powell did not commit to future rate cuts, analysts at Morgan Stanley said, “Further easing primarily depends on evidence of disinflation, likely to emerge later in 2026,” keeping June and September as potential dates for rate cuts.
Impact on Asia
The rupee’s slide mirrors a broader trend in Asia, where currencies across the region are under pressure from rising US yields. Investors remain cautious, balancing domestic flows with global macroeconomic signals.
What it means for the Indian economy
A weaker rupee can make imports costlier, potentially adding to inflationary pressures, while exports may gain competitiveness. Market participants will closely watch RBI actions and global developments to gauge the rupee’s trajectory in the coming days.
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