The Indian Rupee experienced a depreciating trend against the US Dollar for the second consecutive week in early January 2026, a situation largely attributed to robust dollar demand that seemingly outlasted the Reserve Bank of India's (RBI) support efforts. On January 2, 2026, Reuters reported the rupee's continued slide, indicating a sustained period of weakness. Subsequent reports from mid-January confirmed this, with the rupee closing modestly weaker on various days. For instance, on January 16, 2026, the rupee recorded its worst one-day fall in nearly two months, falling approximately 0.7% week-on-week, and settling near its all-time low at 90.78 against the US dollar. Key factors contributing to this decline included elevated dollar demand from importers and maturing non-deliverable forward (NDF) positions. Persistent foreign institutional investor outflows from Indian equities also exerted significant pressure on the domestic currency, a trend that began in 2025 and continued into 2026. Despite multiple interventions by the RBI, including dollar sales to stabilize the currency, the rupee struggled to make significant headway, indicating that the underlying demand for dollars was substantial enough to dilute the impact of these interventions. Analysts noted that while RBI intervention might limit near-term weakness, it also presented a challenge by reducing rupee liquidity. Broader global dollar strength, influenced by factors like robust US labor market data and a hawkish stance from US Federal Reserve officials, further exacerbated the rupee's challenges. Additionally, ongoing uncertainties surrounding US-India trade talks and geopolitical tensions contributed to a cautious market sentiment, suggesting continued volatility for the rupee.