The Indian rupee concluded trading on Thursday, January 29, 2026, hovering perilously close to its historic low, settling at 91.96 against the US dollar. This positioning underscores the persistent pressures facing the domestic currency amidst a complex global economic landscape.
Factors Driving the Rupee's Decline
Forex market analysts and traders highlighted multiple headwinds contributing to the rupee's weakness. The currency even touched an intra-day low of 92 against the US dollar during the session, matching its previous all-time low, before recovering slightly by the close.
Geopolitical Uncertainty and Foreign Capital Outflows
Geopolitical tensions in various regions have created a risk-averse environment in global financial markets. This uncertainty has prompted foreign investors to pull capital out of emerging markets like India, leading to significant foreign outflows that directly pressure the rupee's value. The outflow of dollars reduces demand for the Indian currency, causing it to depreciate against the US dollar.
Impact of Rising Crude Oil Prices
Simultaneously, a surge in global crude oil prices has exerted additional downward pressure on the rupee. India, being a major net importer of crude oil, faces higher import bills when oil prices rise. This increases the demand for US dollars to pay for these imports, further weakening the rupee. The dual effect of capital outflows and expensive oil imports creates a challenging scenario for the currency's stability.
Market Sentiment and Future Outlook
Traders remain cautious as these factors show little sign of immediate abatement. The rupee's performance is closely tied to global risk sentiment, which remains fragile due to ongoing geopolitical developments. Additionally, movements in crude oil markets continue to be a critical variable influencing the currency's trajectory.
Market participants are closely monitoring the Reserve Bank of India's potential interventions and broader economic indicators for cues. The rupee's resilience will be tested in the coming sessions as it navigates these external pressures while domestic economic fundamentals also play a role in shaping its path forward.
