Indian Rupee Hits Record Low Amid Market Stress
The Indian rupee weakened to a fresh all-time low against the U.S. dollar on Wednesday, reflecting intensified risk aversion in global markets and continued capital outflows. The currency has been under pressure in recent sessions, sliding past previous lows as demand for dollars rose and investor sentiment weakened.
What Drove the Decline
Traders said global uncertainty and geopolitical tensions contributed to cautious trading, prompting foreign investors to reduce holdings in Indian assets. Persistent outflows from Indian equities and stronger importer demand for dollars also added pressure on the rupee. The trend continued a broader depreciation that began in late 2025 and extended into early 2026.
Role of the Central Bank
The Reserve Bank of India has been closely watching currency movements and intervened at times to absorb volatility. Officials have indicated a willingness to tolerate some depreciation if driven by market flows rather than speculative pressures, though more aggressive support could be considered if volatility spikes further.
Economic Context
While India’s current account deficit remains manageable, weak capital inflows and external uncertainties have left the currency exposed. Analysts say the rupee’s outlook will depend on improvements in foreign investment sentiment and broader global risk appetite.
