Rupee Hits Lifetime Low of Rs 92 per Dollar: What’s Dragging the Currency Down Again

The Indian rupee slipped to an all-time low of nearly ₹92 against the US dollar on Thursday, extending its losing streak and raising fresh concerns among investors and importers. Market participants say the latest decline is the result of multiple pressures converging at once — persistent foreign fund outflows, unfavourable global conditions, muted central bank intervention, and delayed dollar inflows from exporters.

Currency experts note that while the rupee has historically depreciated over the long term due to India’s trade and current account deficits, the current phase stands out for its timing. The currency is weakening even as the US dollar has softened against several major global currencies. This divergence has made the rupee one of the weaker performers among emerging market currencies.

In 2025, most emerging market units posted gains, yet the rupee depreciated by around five per cent. Analysts say this underperformance is being driven primarily by sustained foreign portfolio investor selling. Net foreign outflows crossed ₹18 billion last year and have continued into 2026, exerting steady pressure on the currency.

Another factor weighing on the rupee is the approach adopted by the Reserve Bank of India. While the central bank has sufficient foreign exchange reserves to smooth volatility, it has refrained from aggressively defending any specific level. This measured stance has allowed market forces to play out, resulting in a gradual but persistent slide.

The lack of strong intervention has also influenced exporter behaviour. With expectations of further depreciation, many exporters are delaying the conversion of their dollar earnings, tightening near-term dollar supply in the domestic market. This imbalance between demand and supply has further weakened the rupee.

Global factors continue to add to the strain. Elevated US bond yields, lingering uncertainty over global interest rate trajectories, and cautious risk sentiment have kept capital flows tilted away from emerging markets. Routine month-end dollar demand from importers and hedging activity by corporates have compounded the downward pressure.

Despite the record low, economists stress that the rupee’s fall does not signal a deterioration in India’s core economic fundamentals. Growth remains relatively stable, inflation is within manageable bounds, and macroeconomic indicators do not point to a crisis. Instead, the current weakness is being viewed as part of a broader global currency realignment.

Looking ahead, market participants believe the rupee could remain range-bound near current levels unless a clear catalyst emerges. A decisive intervention by the RBI could provide temporary relief, but a sustained recovery would likely require renewed foreign inflows. One potential trigger could be progress on the long-pending US–India trade agreement. If such a deal materialises, analysts say the rupee could strengthen meaningfully, potentially moving back below the ₹90-per-dollar mark.

For now, the central bank appears comfortable managing volatility rather than drawing a firm line in the sand. This suggests that unless market conditions turn disorderly, the rupee may continue to reflect global forces rather than policy-driven support.

In essence, the rupee’s record low underscores the impact of global churn, steady foreign outflows, and a deliberate policy stance that prioritises flexibility over aggressive defence. Until fresh capital inflows return or global conditions ease, the currency may remain under pressure in the near term.