The Indian rupee extended its fall on Wednesday, sliding 32 paise to touch a fresh all-time low of 91.29 against the U.S. dollar. The sell-off was triggered as escalated global trade tensions have increased risk aversion and kept emerging market currencies under pressure.

In early interbank trade, the rupee opened at 91.05 and fell sharply to 91.296 against the greenback, marking a 32-paise decline from its previous close.

On Tuesday, the domestic currency lost 7 paise to settle at a record low of 90.97 against the dollar. The rupee had earlier touched an intra-day low of 91.14 and recorded its weakest closing level of 90.93 on December 16, 2025.

According to forex experts, currency sentiment remained under pressure amid rising geopolitical uncertainty after U.S. President Donald Trump’s renewed push on Greenland sparked concerns over a potential trade dispute between the U.S. and Europe. Adding to the downside pressure were weak domestic equity markets and continued foreign capital outflows, which further dampened sentiment toward the rupee.

“The currency remains range-bound with participants awaiting fresh triggers from the Union Budget due on February 1, 2026, while the U.S. Fed’s policy decision later this month is expected to add volatility. The rupee is likely to trade between 90.45 and 91.45 in the near term," said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.

So far this month, foreign portfolio investors (FPIs) have withdrawn ₹32,253.55 crore from Indian equity market, with gross purchases of ₹1,53,046.26 crore offset by gross sales of ₹1,85,299.81 crore. On January 20 alone, FPIs were net sellers to the tune of ₹2,938.33 crore.

In contrast, domestic institutional investors (DIIs) remained net buyers, helping cushion the impact of foreign outflows. Month-to-date, DIIs have infused a net ₹41,976.70 crore into equities, with gross purchases of ₹2,24,667.96 crore against sales of ₹1,82,691.26 crore. On January 20, DIIs recorded net purchases of ₹3,665.69 crore.

The sustained selling in the domestic equity market also weighed on rupee movement. On Tuesday, the Indian equity markets witnessed sharp selling, with benchmark indices, the Sensex and the Nifty, sliding to their lowest levels in over three months as global risk sentiment deteriorated amid rising geopolitical tensions and weak overseas cues. The Nifty and the Sensex settled lower by 1.38% and 1.28% at 25,232.50 and 82,180.47, respectively. Investor wealth took a significant hit, with the total market capitalisation of BSE-listed companies shrinking by nearly ₹9.4 lakh crore to ₹455.82 lakh crore.

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