Why did the Indian rupee depreciate on January 1, 2026?

The rupee depreciated due to sustained foreign fund outflows and weak domestic equity markets, impacting investor sentiment.

What was the performance of the Indian Rupee in 2025?

The Indian rupee slumped by 5% in 2025, making it one of Asia's worst-performing currencies due to persistent capital outflows.

How did the Indian stock market perform on January 1, 2026?

The Indian stock market ended its first trading session of 2026 on a flat note, with the Sensex slightly down and the Nifty marginally up.

Home / Business and Economy / Rupee Slips on New Year's Day Amid Fund Outflows

Rupee Slips on New Year's Day Amid Fund Outflows

1 Jan

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Summary

Rupee closed at 89.98 against USD on Jan 1, 2026.
Foreign fund outflows and weak equities dented investor sentiment.
Rupee saw a 5% slump in 2025 due to persistent capital withdrawals.

Rupee Slips on New Year's Day Amid Fund Outflows

The Indian rupee began the trading year 2026 with a decline, closing at 89.98 against the US dollar on January 1st. This depreciation of 10 paise was influenced by persistent foreign fund outflows and a subdued domestic equity market, impacting investor sentiment negatively. The local unit's performance reflects a broader trend, having already experienced a 5% slump in the previous year due to significant capital withdrawals.

Forex traders noted that while easing crude oil prices offered some support, these gains were counterbalanced by a stronger US dollar index and ongoing foreign fund outflows. The USD/INR pair operated within a narrow range throughout the trading session. The Indian stock market ended its first trading day of 2026 on a mixed note, with the Sensex experiencing a slight dip while the Nifty saw a marginal increase.

Further adding to economic indicators, gross GST collections for December 2025 showed a modest increase of 6.1% to over Rs 1.74 lakh crore, compared to Rs 1.64 lakh crore in December 2024. This growth, however, was tempered by slower domestic sales revenues following tax reductions. Foreign Institutional Investors were net sellers on Wednesday, offloading equities worth Rs 3,597.38 crore.