FX.co ★ Indian Rupee Weakens to Over 4-Week Low

The Indian rupee has depreciated to approximately 90.7 per dollar, marking its lowest point in over four weeks due to ongoing foreign portfolio outflows. In January alone, outflows from the Indian stock market have surpassed $2 billion, with investors divesting $390 million in stocks and $91 million in bonds as of January 15. Domestic economic pressures, such as an expanding merchandise trade deficit and sustained, albeit manageable, current account deficits, continue to exert pressure on the currency. Additionally, high U.S. Treasury yields and a strong U.S. dollar, coupled with uncertainty pertaining to President Trump's tariff threats involving Greenland, have further exacerbated the rupee's decline. Meanwhile, the Reserve Bank of India (RBI) is maintaining a market-oriented strategy, intervening only to prevent excessive volatility rather than to defend a particular exchange rate level. Governor Sanjay Malhotra has clarified that this policy is designed to ensure orderly currency movements and financial stability, accepting gradual depreciation as a part of this strategy.