Indian Rupee Hits 95 Per Dollar Amid Foreign Outflows

The Reserve Bank of India intervened in the currency market on July 1 and 2, 2026, to support the rupee as it depreciated against the US dollar. The currency initially fell to between 94.68 and 94.75 on July 1, driven by a resilient US dollar and geopolitical uncertainty regarding US-Iran peace talks. Despite reports of a nearing India-US trade agreement and support from the central bank selling dollars, the rupee continued to slide.

On July 2, the rupee closed at 95.34, a decline of 18 paise. While the currency briefly opened higher at 94.95 following falling crude oil prices and less hawkish comments from Federal Reserve Chair Kevin Warsh, these gains were erased by strong dollar demand from corporate hedgers and importers.

Pressure on the currency was further exacerbated by significant capital flight. Foreign Portfolio Investors have withdrawn ₹2.7 lakh crore from Indian equities in 2026, a figure that already exceeds the total withdrawals for all of 2025. Despite the currency's volatility, the domestic equity market remained positive, with the Sensex rising 579.48 points and the Nifty increasing 169.85 points.