Indian Rupee Starts 2026 Still Weak

2026-01-02 07:20 By Joshua Ferrer 1 min. read

The Indian rupee weakened past 90 per dollar, extending losses from the previous sessions to start the new year on the back foot, as persistent dollar demand outweighed the Reserve Bank’s intervention.

State-run banks continued selling dollars on behalf of the central bank to support the currency, but could not prevent a breach of the 90 mark.

Underlying demand remained strong, driven by foreign banks handling custodial flows and large importer payments, while foreign investors started the year as net sellers of Indian equities.

The country’s economic activity also slowed in December, with manufacturing PMI growth hitting a two-year low.

The rupee lost roughly 5% in 2025, making it the worst-performing Asian currency, pressured by steep US tariffs and weak investment flows.

Its trajectory in 2026 will largely hinge on developments in a potential US–India trade deal and foreign portfolio investor activity, which could reshape the dollar flows that weighed on the currency last year.



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