Rupee hits 91 vs US dollar amid corporate demand and trade uncertainty

The Indian rupee breached the psychologically crucial 91 per US dollar on Monday, pressured by corporate dollar demand, foreign portfolio investor outflows, and uncertainty over India-US tariff talks
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The rupee fell below the key threshold of 91 against the US dollar for the second time in roughly a month on Monday. Persistent corporate dollar demand, ongoing foreign portfolio outflows from domestic equities, and ambiguity surrounding India-US tariff negotiations contributed to the currency’s descent.

The domestic unit pared some losses during the session—potentially aided by tactical dollar sales from the Reserve Bank of India (RBI)—to close at 90.9425 per USD, weakening 7 paise from its previous close of 90.87. Intraday volatility saw the rupee swing between a high of 90.63 and a low of 91.01. This mirrored its first breach beyond 91 on December 16, 2025, when it touched 91.14.

Corporate Dollar Demand Limits Recovery

Despite initial strength supported by a softer US dollar, sustained dollar buying by corporates and importers capped the rupee’s recovery. Market analysts noted that hedging activity intensified as companies sought to lock in exchange rates amid renewed volatility.

Market Dynamics

Trading volumes were subdued due to a holiday in US markets, limiting dollar liquidity and exacerbating demand-supply imbalances. The rupee’s early gains reversed swiftly as local firms scrambled for dollars while foreign banks remained on the sidelines. State-run banks were suspected to have intervened near the 91.01 level to stem further depreciation.

Geopolitical and Trade Risks

Ongoing trade negotiations between India and the US, coupled with broader geopolitical tensions, amplified investor caution. With no resolution in sight, importers were advised to hedge near-term exposures proactively, while exporters were urged to capitalize on sporadic rupee rallies.

Outlook

The rupee remains vulnerable to external headwinds, with analysts predicting continued pressure until global uncertainties ease or concrete progress emerges on trade agreements. Market participants anticipate the RBI will continue to smooth excessive volatility without defending specific levels aggressively.

Published on January 19, 2026