02.01.202607:20:28UTC+00Indian Rupee Starts 2026 Weak

The Indian rupee fell past the 90 per dollar mark on Friday, continuing its downward trend from the previous session as the new year commenced on a challenging note. Despite intervention efforts from the Reserve Bank, including dollar sales by state-run banks, the rupee could not hold firm against steady dollar demand. This persistent demand was primarily driven by foreign banks managing custodial flows and substantial payments from large importers. Additionally, foreign investors began the year by selling Indian equities, adding further pressure. Economic activity in India showed signs of deceleration in December, with the manufacturing PMI growth reaching its lowest point in two years. In 2025, the rupee depreciated by around 5%, marking it as the worst-performing currency in Asia, impacted by significant US tariffs and sluggish investment inflows. Looking ahead to 2026, the rupee's path will largely depend on the progression of a potential US-India trade agreement and the behavior of foreign portfolio investors, which could alter the dollar flows that adversely affected the currency in the previous year.