Geopolitics, FPI Withdrawals Behind Rupee Hitting 91.75 Against Dollar, Say Experts

Trump has now scrapped the tariffs that he threatened to impose on eight European nations – something that is understood to have led to great uncertainty.

The Wire Staff

Trump has now scrapped the tariffs that he threatened to impose on eight European nations – something that is understood to have led to great uncertainty.

geopolitics fpi withdrawals behind rupee hitting 91 75 against dollar say experts

File image. A trader exchanges old and antique currency at the 'Bikaner Mudra Utsav', in Bikaner, Rajasthan, Friday, Dec. 26, 2025. Photo: PTI.

New Delhi: The Indian rupee slumped to a new all-time low a day ago on January 21, at 91.75 per US dollar. Reports noted that this was the steepest intraday fall in almost two months. Today, January 22, it gained 15 paise to trade at 91.50 against the US dollar in early deals.

Market experts and participants blamed it on a number of geopolitical and financial factors, including but not limited to risk-aversion linked to US President Donald Trump's designs on Greenland. Trump has now scrapped the tariffs that he threatened to impose on eight European nations to press for US control over Greenland, pulling a dramatic reversal shortly after insisting he wanted to get the island "including right, title and ownership.”

However, Mitul Kotecha, head of forex and emerging markets macro strategy for Asia at Barclays, has been quoted by CNBC TV18 as saying that the Indian rupee’s sharp and idiosyncratic fall against the US dollar reflects domestic pressures rather than a broader emerging market trend. Dollar demand had intensified to a point where it “really just forced dollar-INR much sharply higher,” he said.

Ritesh Bhansali, deputy chief executive officer at Mecklai Financial Services Ltd, was quoted by Mint as having said that geopolitical risks, tariff threats and fears of a trade war are hurting the rupee. "When uncertainty rises, FPIs [foreign portfolio investors] tend to withdraw from emerging markets like India, and that has put direct pressure on the rupee," he said.

According to the Reserve Bank of India's data, November saw a net foreign direct investment outflow of $446 million. The outflow was $1.67 billion in October and $1.66 billion in September. August had seen a net inflow of $215 million.

FPIs have withdrawn $3.36 billion so far in 2026 on a net basis. Last year saw them pull out $18.91 billion.

Dhiraj Nim, forex strategist at ANZ is quoted in the same report as forecasting a worsening situation. "I think the risk is for USD and INR to go higher from here and technically be looking at 92-92.50 as an important range of resistance from here on," he said.

This article went live on January twenty-second, two thousand twenty six, at seventeen minutes past one in the afternoon.

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