On Friday, January 16, 2026, the Indian Rupee experienced a notable depreciation, slipping to trade around 90.44 against the U.S. dollar, marking a decline in early trade. This movement was primarily attributed to robust dollar demand from corporations for hedging and other requirements, alongside significant activity in the non-deliverable forwards (NDF) market. Financial markets observed heightened demand for dollars, particularly around the central bank's daily reference rate, impacting the Rupee's value. Traders also noted a slight arbitrage between onshore forwards and the NDF market, which further pressured the Indian currency. The depreciation occurred amidst a broadly firmer U.S. dollar, which was buoyed by upbeat economic data from the United States and hawkish comments from Federal Reserve officials, signaling reduced expectations for immediate interest rate cuts. This global strengthening of the dollar typically puts pressure on emerging market currencies like the Rupee. The Reserve Bank of India (RBI) was seen intervening in the foreign exchange market, selling dollars to curb excessive volatility and support the Rupee, though its stated objective is to manage volatility rather than target a specific exchange rate level. Reports indicated RBI's continued efforts to manage market sentiment, including through the offshore NDF market. Further contributing to the Rupee's challenges was India's widening trade deficit, which reached $25.04 billion in December 2025. This indicated increased import costs relative to export earnings, necessitating higher demand for foreign currency and adding strain on the Rupee. Foreign institutional investor outflows also weighed on the currency. Despite the downward pressure, some analysts suggested the Rupee might find support, with expectations that central bank intervention and a moderation in the trade deficit could cap further losses.