The Indian rupee slipped to a new record low of around 90.47 per US dollarmarking one of its sharpest bouts of weakness in recent months. While the fall triggered concern across markets, analysts point out that the slide is not driven by domestic instability but by powerful global forces that have simultaneously pressured emerging-market currencies.
Research by Bank of America (BofA) suggests that the rupee’s decline mirrors a deeper global shift rather than any structural deterioration at home. Foreign investors trimmed exposure to emerging markets, slowing both portfolio equity inflows and foreign direct investmentleaving India with weaker capital support.
At the same time, the Reserve Bank of India (RBI) intensified its defence of the currency. According to BofA’s estimates, the central bank sold around USD 65 billion across spot and forward markets in an effort to curb volatility. This heavy intervention, combined with already-soft inflows, tightened rupee liquidity and magnified downside pressure.
Global sentiment turned sharply risk-averse just as the US dollar strengthened, trade flows cooled, and new tariff actions unsettled markets. In this environment, the rupee’s weakness appeared more like global collateral damage than a sign of domestic stress.
Despite the currency movement, BofA highlights that India’s macro picture is broadly resilient. Growth momentum continues, inflation has moderated, and the current account is not flashing red. The rupee’s fall, therefore, reflects “weaker capital flows, lower net inflows and a negative sentiment impulse,” pointing to external shocks rather than internal fragility.
BofA remains constructive on the medium-term outlook. The firm expects 2026 to bring a cooling in global turbulence — led by a potential slowdown in the USa softer dollar, and a gradual improvement in global trade sentiment. If these conditions materialize, India stands to benefit, with BofA projecting the rupee could strengthen toward 86 per US dollar.
For now, the rupee’s new low underscores a simple reality: the currency is reacting less to what is happening in India, and more to the shifting weather of the global economy.
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