Rupee cracks to fresh lifetime low of 91.74 as Greenland tensions and FII exodus rattle markets — what this means for investors now
The Indian rupee slid to a fresh all-time low of 91.7450 against the US dollar on January 21, extending its losing streak as global risk aversion deepened amid the Greenland geopolitical dispute and sustained foreign investor selling in Indian equities.
At around 2:12 pm, the rupee was trading near 91.6837, after opening weaker at 91.0800 compared with the previous close of 90.9775. Currency traders described the move as one of the sharpest intraday declines in recent months.
“Rupee again faltered to a new low of 91.7425 as Trump’s Greenland issue, Japan bonds selloff and risk-off sentiment takes it lower with equities also down, keeping markets on a sixth straight day of decline,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
He added that this marked the biggest single-day fall for the rupee in the last three months.
FII selling accelerates pressure on currency and equities
Beyond global cues, the most persistent pressure point remains foreign portfolio investor (FPI) outflows. According to market participants, foreign investors have already sold around Rs 33,000 crore worth of Indian equities in January, with net selling recorded on 12 trading sessions so far.
Bhansali said the pressure has been compounded by multiple domestic factors:
-
Delays in India–US trade negotiations
-
Concerns over higher US tariffs on Indian exports
-
Rising dollar demand from importers, especially those dealing in precious metals
-
Continuous equity market weakness, reducing overseas risk appetite
“Elevated dollar demand from importers particularly those dealing in precious metals has exacerbated the slide,” he noted.
With this decline, the rupee has now become the second worst-performing Asian currency in 2026, down 1.98 percent year-to-date, underscoring how external and domestic pressures are converging.
Also Read : Apple Pay Eyes India Launch — iPhone Maker Begins Talks With Banks, Card Networks
Equity markets wobble as currency weakness feeds uncertainty
The sharp rupee fall coincided with continued volatility in Indian equity markets, extending the cautious tone seen over the past few sessions.
In early trade, the Sensex slipped 1,056 points to an intraday low of 81,124.45, while the Nifty fell 312.7 points to 24,919.80, briefly breaking below the 25,000 mark for the first time in over four months. Although a mid-session recovery pushed indices back into the green, another wave of selling dragged benchmarks lower again, with the Sensex shedding nearly 500 points from the day’s high.
Market participants said the rupee’s weakness acted as both a symptom and a trigger — reflecting existing nervousness while also reinforcing caution among traders.
Here’s what happened today and why traders reacted
Currency and equity traders highlighted three key developments that drove today’s reaction:
-
The rupee’s break below 91.50 triggered fresh technical selling in USD-INR
-
Continued FII selling in equities reinforced the perception of foreign capital exiting risk assets
-
Rising geopolitical anxiety around Trump’s Greenland stance amplified the global risk-off mood
Traders said once the rupee breached its earlier support levels, stop-losses were triggered, accelerating the move toward 91.74.
The linkage between equities and currency also became more visible today. As equities weakened, hedging demand rose, which further lifted dollar buying pressure.
What a weaker rupee means for investors and portfolios
For investors, a falling rupee creates a mixed landscape of risks and opportunities rather than a one-dimensional negative.
Currency experts and market strategists point to the following portfolio implications:
-
IT exporters and pharma exporters may benefit from currency tailwinds over the medium term
-
Companies with high import dependence, especially in oil, electronics and capital goods, could face margin pressure
-
Rising rupee volatility could keep FII flows cautious, impacting broader market sentiment
-
Gold and other safe-haven assets often gain attractiveness when currency weakens
At the same time, persistent rupee depreciation can feed into imported inflation, which could complicate the outlook for interest rates if sustained.
Why the Greenland issue is influencing Indian markets
While the connection may appear indirect, global investors increasingly treat geopolitical events as systemic risk triggers. The renewed uncertainty around US President Donald Trump’s stance on Greenland, along with fears of fresh tariff actions against multiple countries, has pushed global funds into capital preservation mode.
That shift typically leads to:
-
Selling in emerging market equities
-
Flight into the US dollar
-
Strengthening of safe havens like gold
-
Pressure on higher-beta currencies like the rupee
Currency traders said today’s move reflects this broader shift rather than a purely India-specific panic.
What to watch next in USD-INR and market direction
Market participants believe the rupee’s trajectory over the next few sessions will depend on a combination of domestic and global triggers.
Key factors investors and traders are tracking include:
-
Whether FPIs continue heavy selling or slow their outflows
-
Movement in the US dollar index and US bond yields
-
Developments around US trade policy and geopolitical rhetoric
-
RBI’s potential comfort level with the pace of rupee depreciation
While some traders expect intermittent technical rebounds, sentiment in the near term remains cautious.
As one senior dealer summed up, the rupee’s fall is no longer just about levels — it is about confidence. Until global risk appetite stabilises and foreign flows show signs of returning, currency volatility is likely to remain an important variable for equity investors to monitor closely.
