For now foreigners seem smarter. Time for Indian business to shake out of comfort zone.
When a currency breaks through a symbolic threshold, it rarely does so quietly — it carries with it the accumulated weight of unresolved negotiations, shifting capital loyalties, and the quiet anxiety of an economy caught between its ambitions and its vulnerabilities. The Indian rupee's fall past 90 to the dollar this week is precisely such a moment: foreign investors have been withdrawing from Indian markets for months, domestic buyers have not been enough to hold the line, and the stalled India-US trade talks have stripped away whatever patience remained. What follows now is not merely a question of exchange rates, but of whether Indian institutions and businesses can adapt faster than confidence erodes.
- The rupee hit an all-time low of 90.26 against the dollar, extending a depreciation of more than 5 percent since January — a number that is no longer abstract for businesses pricing imports or investors measuring returns.
- Foreign portfolio investors pulled nearly Rs 3,642 crore from Indian equities in a single session, overwhelming domestic buying and leaving the Nifty 50 with effectively zero dollar-denominated returns over the past year.
- Stalled India-US trade negotiations have become the visible trigger for accelerated selling, with markets losing patience for vague assurances and demanding concrete commitments that have not materialized.
- The RBI's restrained response to the rupee's slide has amplified the decline, and all eyes now turn to Friday's policy announcement as the first real test of whether the central bank will act to arrest the fall.
- The rupee's weakness is already reshaping winners and losers — IT, pharma, and textiles gain as foreign earnings swell in rupee terms, while FMCG, oil, and polymer-dependent industries brace for rising input costs.
The Indian rupee crossed 90 to the dollar this week, a threshold that turned a slow-building problem into an undeniable headline. Uday Kotak, founder of Kotak Mahindra Bank, framed it directly: foreign portfolio investors and private equity firms are pulling money out of Indian equities, and domestic buyers — though active — have not been able to absorb the outflow. The scoreboard, as he put it, currently favors the foreigners.
By Wednesday, the rupee had reached 90.26, with the currency down more than 5 percent for the year. In a single session on Tuesday, foreign institutional investors net-sold Rs 3,642 crore worth of shares even as domestic institutions bought Rs 4,646 crore. Benchmark indices fell for a third consecutive day, with pressure spreading broadly across sectors.
Analysts point to the stalled India-US trade deal as the proximate cause of the recent acceleration. Markets had tolerated delays, but patience has run out — investors want commitments, not reassurances. The Reserve Bank of India's muted intervention has done little to slow the rupee's descent, making Friday's policy announcement a closely watched moment. Technically, analysts note, the currency is deeply oversold, and a sustained move above 89.80 could signal the beginning of a recovery.
The rupee's weakness does not fall evenly. Export-oriented industries — IT, pharmaceuticals, textiles, engineering, and metals — find their foreign revenues worth more in rupee terms, giving them a quiet tailwind. Import-reliant sectors face the reverse: FMCG companies, oil and gas firms, and plastic polymer users will pay more for the same foreign inputs.
Kotak's message to Indian businesses carried an edge of urgency: do not wait for conditions to normalize. The currency is sending a signal, and whether foreign investors return or not, companies must be prepared to operate in a structurally weaker rupee environment. The RBI's next move will matter — but it will not be sufficient on its own.
The Indian rupee slipped past 90 to the dollar this week, marking a new low for the currency and crystallizing a problem that has been building for months: foreign investors are leaving, and no one quite knows when they'll come back.
Uday Kotak, the founder of Kotak Mahindra Bank, put it plainly on social media. The rupee's weakness stems from foreign portfolio investors and private equity firms pulling money out of Indian stocks. Domestic investors have stepped in to buy, but their appetite hasn't been enough to offset the exodus. The result is stark: the Nifty 50 index has delivered zero returns when measured in dollars over the past year. For now, Kotak observed, the foreigners appear to be winning the bet.
By Wednesday, the rupee had weakened to 90.26 against the dollar, extending a depreciation that has accumulated to more than 5 percent since the start of the year. On Tuesday alone, foreign institutional investors pulled out a net 3,642 crore rupees while domestic investors bought 4,646 crore rupees worth of shares. The benchmark indices closed lower for the third straight session, with selling pressure spreading across sectors.
The immediate culprit, according to analysts, is the stalled India-US trade negotiation. Jateen Trivedi, a research analyst at LKP Securities, noted that markets have grown impatient with repeated delays and vague promises. Investors now want concrete commitments, not broad assurances. That impatience has accelerated the selling of rupees over recent weeks. The Reserve Bank of India's muted response to the currency's fall has only quickened the decline. Trivedi suggested that the central bank's policy announcement on Friday would be crucial—markets are watching to see whether the RBI will finally intervene to stabilize the rupee. Technically, he added, the currency is deeply oversold, and a recovery above 89.80 would signal a potential turnaround.
The weakness cuts differently across the Indian economy. Export-oriented sectors stand to gain: information technology, pharmaceuticals, textiles, shrimp farming, engineering, metals, and automobiles all benefit when the rupee is weak, since their foreign earnings translate into more rupees at home. But import-dependent industries face the opposite pressure. Companies in fast-moving consumer goods, plastic polymers, oil and gas, and other sectors that rely on foreign inputs will see their costs rise as they need more rupees to buy the same amount of foreign currency.
Kotak's message to Indian businesses was blunt: stop waiting for conditions to improve on their own. The time has come to adapt, to innovate, to break out of comfortable patterns. The currency market is sending a signal, and whether foreign investors return or not, Indian companies need to be ready to operate in a world where the rupee is weaker and the playing field has shifted. The central bank's next move will matter, but it won't solve everything. The real work falls to the businesses themselves.
Citas Notables
Time for Indian business to shake out of comfort zone— Uday Kotak, Founder & Director, Kotak Mahindra Bank
Markets now want concrete numbers rather than broad assurances, leading to accelerated selling in the rupee— Jateen Trivedi, VP Research Analyst, LKP Securities
La Conversación del Hearth Otra perspectiva de la historia
Why does it matter that foreign investors are selling? Couldn't domestic money be enough?
Domestic investors are buying, yes, but they're not buying as much as foreigners are selling. That gap is the problem. Foreign investors bring fresh capital and confidence. When they leave, it signals doubt about India's near-term prospects.
What's the trade deal delay actually about? Why does that spook investors so much?
Investors want certainty. A trade deal would signal stability and market access. Without it, they're left guessing about tariffs, regulations, and India's economic direction. Vague promises don't move money.
So the rupee gets weaker, and some companies win while others lose. That seems like a wash.
It's not a wash. The companies that lose—FMCG, oil companies—they're the ones that touch everyday life. If their costs rise, prices rise. That affects ordinary people. The winners are mostly export-focused, which helps the balance sheet but doesn't necessarily help the person buying groceries.
What does Kotak mean by Indian businesses needing to shake out of their comfort zone?
He's saying the old playbook doesn't work anymore. Companies can't assume stable currency, stable foreign investment, stable growth. They need to build resilience, find efficiencies, maybe rethink their supply chains. The world has changed; they need to change with it.
Is the RBI actually powerless here, or are they choosing not to intervene?
That's the question everyone's asking. The RBI has tools—it can sell dollars to support the rupee. But intervention is expensive and has limits. They might be waiting to see if this is temporary panic or a real shift in sentiment. Friday's announcement will tell us which it is.