Indian rupee hits record low on Greenland-spurred risk aversion, capital flow strain

MUMBAI: The Indian rupee fell to an all-time low on Wednesday as risk aversion linked to the Greenland dispute compounded pressures from ongoing capital outflows and the absence of a US–India trade agreement.

The rupee weakened past its prior all-time low of 91.0750 per US dollar set in mid-December, and was last quoting at 91.2950.

The currency is down 1.5% so far this month, adding to a near 5% decline in 2025.  

Many of the challenges that weighed on the rupee in 2025 remain.

Equity outflows persist and importers are more inclined to hedge than exporters amid expectations of further depreciation.

Additionally, forward premium levels are seen as insufficient to price in the extent of the expected depreciation.

While India’s current-account deficit remains manageable, the lack of capital inflows is a hurdle, leaving the currency exposed to further weakness, analysts said.

“The rupee’s biggest challenge is on the capital side,” said Dhiraj Nim, FX strategist at ANZ Bank.

“The central bank seems willing to tolerate a weaker rupee if the move is flow-led, whether from importer hedging or capital outflows. Speculative pressure is what will invite a tougher response.”