Rupee Falls 7.8% To Near 97 Against US Dollar So Far In 2026: Will It Hit 100 Mark Soon?
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The rupee touches record low of 96.90 against the US dollar in early trade, marking a depreciation of 7.8% since the beginning of this year and 13.33% compared to May 20 last year.
The domestic currency had started 2026 at 89.89 per dollar and weakened steadily through the year.
The Indian rupee has come under intense pressure in 2026, sliding to a fresh all-time low against the US dollar amid sustained foreign fund outflows, elevated crude oil prices and rising concerns over India’s external position.
The rupee on Wednesday (May 20, 2026) touched a record low of 96.90 against the US dollar in early trade, marking a sharp depreciation of around 7.8 per cent since the beginning of this year and over 13.33 per cent compared to May 20 last year.
The domestic currency had started 2026 at 89.89 per dollar. It weakened steadily through the year — falling to 91.27 on February 2, 91.59 in March 2, 93.21 in April 1 and 94.89 by May 1 — before sliding further to the current 96.90 level on May 20.
Exactly a year ago, on May 20, 2025, the rupee had stood at 85.50 against the dollar.
Rupee recovery in April failed to sustain
The rupee had briefly staged a recovery in late March and early April after intervention measures by the Reserve Bank of India (RBI) triggered heavy unwinding of speculative forex positions by banks.
On March 27, the rupee had hit 94.84 against the dollar. However, on March 30, it rebounded sharply and rose nearly 1 per cent to 93.85 in early trade after the RBI tightened norms related to banks’ forex exposures.
The central bank had directed banks to cap their net open rupee positions in the foreign exchange market at $100 million by the end of each business day, with compliance mandated by April 10. The move forced banks to unwind arbitrage trades between the non-deliverable forward (NDF) market and onshore forwards market. That unwinding led to significant dollar selling in the domestic market and temporarily supported the rupee.
The currency further strengthened to around 92.33 on April 8. However, the recovery proved short-lived as fresh foreign institutional investor (FII) selling, higher oil prices and a stronger dollar resumed pressure on the rupee.
Why the rupee is weakening
Market experts say a combination of external and domestic factors has intensified pressure on the Indian currency.
V K Vijayakumar, chief investment strategist at Geojit Investments, said, “This years total FPI selling, so far, has exceeded the total selling last year. This sustained selling by FPIs has, along with the rising current account deficit, weakened the rupee significantly. At the beginning of this year, the rupee was at 90. On May 15, it breached the 96 level to touch 96.14 to the dollar. So long as FPIs continue to sell and crude price remains elevated, the rupee is likely to weaken further.”
He added that global capital flows towards artificial intelligence-linked companies in developed markets are also hurting emerging markets like India.
“The trend of AI companies attracting capital flows from all over the world also is continuing to the flight of capital from countries like India who are AI laggards. This trend will change when the AI trade, which is already in bubble territory, ends,” Vijayakumar said.
Will rupee fall further and hit the 100 mark against the US dollar?
“The rupee may further depreciate aggravating the vicious cycle of rupee depreciation and FPI selling,” Vijayakumar said.
Recently, BMI, a unit of Fitch Ratings, also flagged the risk of the currency sliding to 100 if the Iran war worsens.
Iran-US tensions add to pressure
The latest leg of rupee weakness comes amid rising geopolitical tensions involving Iran and the US, which have pushed crude oil prices sharply higher. Forex traders said elevated crude prices are increasing concerns over India’s import bill and current account deficit, both of which directly impact the rupee.
Brent crude, the global oil benchmark, was trading around $110.59 per barrel in futures trade on Wednesday.
At the same time, the dollar index, which measures the greenback’s strength against a basket of six major currencies, remained firm near 99.26. A stronger dollar generally makes emerging market currencies, including the rupee, weaker.
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