Indian Rupee Hits Record Low: Greenland Dispute Fuels Risk Aversion

Synopsis The Indian rupee hit an all-time low Wednesday, pressured by global risk aversion from the Greenland dispute, persistent capital outflows, and a stalled US-India trade deal. Importers are hedging more amid expectations of further depreciation, while forward premiums are insufficient. The central bank is tolerating flow-led weakness, but speculative pressure could trigger a stronger response. Listen to this article in summarized format Loading... × 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 U.S.–India trade agreement. The rupee weakened past its prior all-time low of 91.0750 per U.S. 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. Live Events "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." EQUITY OUTFLOWS Portfolio flows remain weak, with foreign investors withdrawing about $3 billion in January after record outflows of $18.9 billion in 2025 "The rupee’s performance continues to reflect structural demand-supply imbalances rather than any deterioration in domestic fundamentals," India Forex Advisors said in a note, adding that the currency will remain sensitive to corporate demand dynamics and portfolio flows. An escalation in Greenland-related risk aversion would likely reinforce outflows, increasing downside pressure on the rupee. Indian equities fell ‍the most in eight months on Tuesday, with foreigners selling more than $300 million of shares. Meanwhile, the absence of concrete progress on a trade deal has ‍deprived the rupee ⁠of a potential inflow ⁠catalyst. The Reserve Bank of India's approach to the foreign exchange market has remained consistent in recent months. Rather than defending specific levels, the central bank has intervened intermittently to absorb a part of the pressure on the rupee. Adding to the strain on the currency this year is weakness in most Asian peers — a factor that was largely absent in 2025. The rupee has, however, tended to chart its own course in recent periods, showing less sensitivity to moves in regional peers, and is performing around the middle of the pack among Asian currencies this month. (You can now subscribe to our ETMarkets WhatsApp channel) (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price ...moreless Fly91’s bumpy climb mirrors why genuine airline startups struggle in India Indian IT finally stops window-shopping and heads to the M&A checkout Can this IPO-bound company step out of Flipkart’s shadow? FOMO or geopolitical safety net: What’s fuelling the gold ETF rush? Stock Radar: Tech Mahindra stock hits fresh 52-week high; time to buy or book profits? These large-caps have ‘strong buy’ & ‘buy’ recos and an upside potential of more than 25% 1 2 3