Mumbai: The Indian rupee began the first trading day of 2026 on a negative note, slipping against the US dollar in early trade. The currency depreciated by 11 paise to reach 89.99 per dollar at the interbank foreign exchange market in Mumbai. This marked a weaker start compared to its previous close of 89.88 on the last trading day of 2025.
Foreign Outflows Weigh on Currency
Market experts said the main reason for the rupee’s fall was continued selling by foreign investors. Foreign Institutional Investors (FIIs) sold Indian equities worth Rs 3,597.38 crore on Wednesday, according to stock exchange data. Such outflows increase demand for the US dollar and put pressure on the rupee.
Global Factors Add to Pressure
Global uncertainty is also affecting currency markets. The US dollar index, which measures the dollar’s strength against six major currencies, was slightly higher at 98.32. A stronger dollar usually makes emerging market currencies like the rupee weaker. At the same time, Brent crude oil prices fell to around USD 60.85 per barrel, which provided some relief as India imports most of its oil.
RBI’s Role and Expert View
Forex experts believe volatility may continue in the near term. Amit Pabari, Managing Director of CR Forex Advisors, said the Reserve Bank of India under Governor Sanjay Malhotra appears comfortable allowing the rupee to move with market forces. However, the central bank is expected to step in if movements become too sharp, to ensure orderly market conditions.
He added that progress on the paused India–US trade deal could support the rupee if talks move forward. For now, the dollar-rupee exchange rate is expected to trade between 89.30 and 90.20. A sustained move below 89.30 could strengthen the rupee further.
Equity Markets Show Strength
Despite weakness in the rupee, domestic stock markets showed positive movement. The Sensex rose by over 194 points to trade above 85,400, while the Nifty gained nearly 48 points to cross 26,170. This reflects continued confidence in India’s economic growth story.
Strong Fundamentals Offer Support
Although the rupee started 2026 on a weak note, India’s strong macroeconomic fundamentals and healthy foreign exchange reserves provide stability. These factors are expected to help limit sharp falls in the currency and support it over the medium term.
