Indian Rupee Extends Decline, Touches 92 Mark Against US Dollar
The Indian rupee continued its downward trajectory on Thursday, breaching the psychologically significant 92 level against the US dollar. This persistent weakness reflects a combination of domestic and global headwinds that have kept the currency under constant pressure in recent sessions.
Key Drivers Behind the Rupee's Fall
Currency dealers attributed the rupee's slide primarily to a rebound in the dollar index from multi-year lows. This movement followed the US Federal Reserve's decision to maintain interest rates unchanged at the conclusion of its first policy meeting of 2026. The cautious stance from the Fed, coupled with heightened geopolitical tensions globally, has prompted investors to flock towards safe-haven assets like the US dollar, thereby weighing heavily on emerging market currencies including the rupee.
In early interbank trade, the domestic unit opened marginally weaker at 91.95 and soon touched 92.00 against the dollar, slipping 1 paisa from its previous close. This decline comes on the heels of a sharp fall in Wednesday's session, where the rupee ended 31 paise lower at 91.99, marking its weakest closing level on record. Notably, the currency had earlier hit its lowest-ever intraday level of 92.00 on January 23, indicating a pattern of sustained depreciation.
Analyst Insights and Market Dynamics
Amit Pabari, Managing Director at CR Forex Advisors, highlighted that continued capital outflows have kept dollar demand elevated in the market. He also pointed to rising crude oil prices as an added pressure on the currency. Oil prices have climbed over 4% this week, extending gains for a third straight session to levels last seen in late September. Specifically, Brent crude futures were up 1.32% at $69.30 per barrel, exacerbating India's import bill and currency strain.
Pabari emphasized that the 92.00 level remains a crucial near-term zone for the USD/INR pair in the non-deliverable forward market. A sustained break above this level could potentially push the pair towards the 92.20–92.50 range. However, he noted that intervention by the Reserve Bank of India and a softer global dollar could limit further depreciation and help the rupee move back towards the 91.00–91.20 range, offering some respite to market participants.
Broader Market and Economic Context
Domestic equities mirrored the cautious sentiment, opening lower on Thursday. The BSE Sensex slipped almost 560 points, while the NSE Nifty was trading below the 25,200 mark. Interestingly, data showed that foreign institutional investors remained net buyers, purchasing equities worth Rs 480.26 crore on Wednesday, suggesting selective optimism amid the broader uncertainty.
On the macroeconomic front, there was a silver lining as the country's industrial output posted its strongest growth in over two years. The Index of Industrial Production rose 7.8% in December 2025, supported by robust performance in the manufacturing, mining, and power sectors. This marks a significant improvement from the 3.7% growth recorded in December 2024, indicating underlying economic resilience despite currency pressures.
Meanwhile, the dollar index, which tracks the US currency against six major peers, was trading 0.29% lower at 96.16, reflecting some volatility in global forex markets. The interplay between domestic factors like RBI interventions and external elements such as Fed policies and oil prices will likely dictate the rupee's near-term direction, with market watchers closely monitoring the 92 level for further cues.
