The Indian rupee weakened to 83.42 per U.S. dollar on Friday, its weakest level in over a month, as foreign portfolio investors pulled $1.2 billion from Indian equities in the past week. The move underscores growing pressure on the local currency amid global risk aversion and shifting capital flows.
- Rupee weakened to 83.42 per USD, its lowest since December 15, 2025
- Foreign portfolio investors pulled $1.2 billion from Indian equities in one week
- Nifty 50 index fell 2.3% over the same period
- RBI intervened with $300–500 million in foreign exchange sales
- Persistent trade deficit and rising U.S. yields are key pressure points
- Weaker rupee boosts export competitiveness but raises import inflation risks
The Indian rupee declined to 83.42 against the U.S. dollar on January 16, 2026, marking its lowest level since December 15, according to real-time trading data. The drop came amid heightened outflows from Indian financial markets, with foreign portfolio investors (FPIs) withdrawing a net $1.2 billion from equities in the past seven days. This marks the largest weekly outflow in three months and signals renewed investor caution amid global macroeconomic uncertainty. The depreciation follows a sharp sell-off in Indian equities, where the benchmark Nifty 50 index lost 2.3% over the same period. The outflows were driven by a combination of rising U.S. Treasury yields, stronger dollar demand, and cautious sentiment ahead of key Federal Reserve policy signals later in the month. Analysts note that foreign capital inflows into India had been positive for eight consecutive months prior to this reversal, making the latest trend particularly noteworthy. The Reserve Bank of India (RBI) intervened in foreign exchange markets to stabilize the rupee, selling dollars to absorb excess supply. While the central bank has not disclosed the exact volume of its intervention, market participants estimate it to be in the range of $300 million to $500 million over the past two days. Despite these efforts, the rupee’s decline reflects underlying vulnerability in India’s external account, particularly as merchandise trade deficits remain elevated. The weakening rupee impacts import costs, particularly for oil and electronics, and could fuel inflationary pressures. The RBI is expected to monitor the situation closely, with potential policy adjustments on the horizon if the depreciation persists. Meanwhile, exporters are benefiting from the weaker currency, with export order volumes in sectors like textiles and pharmaceuticals showing a modest uptick.