Early optimism in the currency market faded quickly on Monday as the Indian rupee gave up initial gains and closed lower for the 4th straight session, weighed down by strong corporate demand for dollars and limited supply.
The rupee briefly strengthened to 90.6450 in early trade after the U.S. dollar pulled back amid global concerns linked to the Greenland dispute. However, the local currency later reversed course and edged closer to the 91 mark. By the end of the session, the rupee settled at 90.91 per dollar, marking its weakest closing level since December 16. It had ended at 90.8650 on Friday.
Some market participants said the Reserve Bank of India stepped in with mild intervention to curb sharper losses.
Initial support for the rupee came from broad-based dollar weakness against major global currencies and Asian peers. Investors trimmed dollar positions amid rising geopolitical tensions over Greenland and renewed threats of U.S. tariffs on European nations. Despite this, sustained corporate dollar buying and thin supply quickly offset the gains.
“Risk-off sentiment is rarely friendly to emerging markets. As investors turn cautious, capital tends to move out of riskier assets. The rupee, already under pressure, may feel added strain and simply put, when the world feels uneasy, emerging market currencies often bear the cost,” said Amit Pabari, Managing Director at CR Forex.
Pabari added that the rupee has now slipped past the key support zone of 90.30–90.50, with the all-time low of 91.0750 emerging as the next critical level to watch.
The rupee’s failure to sustain its early recovery highlights the fragile balance in the foreign exchange market. Any upward move is being met with persistent corporate dollar demand, while inflows remain weak.
Adding to the pressure, foreign portfolio outflows from Indian equities continue to hurt sentiment. Overseas investors have pulled out more than $2.5 billion from Indian stocks so far in January, further limiting support for the local currency.
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