Asia’s Worst-Performing Currency Expected To Remain Weak In 2026

The Indian rupee has been under pressure this year and has become Asia’s worst-performing currency. Two main reasons are behind this fall: slow progress on the U.S.-India trade deal and continuous foreign investor outflows from Indian markets.

Trade deal delay hurting the rupee:-

Talks between India and the United States on a trade agreement have been dragging on for months. Because of this delay, tariffs on Indian goods exported to the U.S. remain very high—around 50%, which is even higher than tariffs on China. Due to these tariffs, India’s exports to the U.S. dropped sharply in September and October.

Although exports improved in November, the uncertainty has already affected investor confidence. Experts from Nomura and S&P Global Market Intelligence believe that if a trade deal is not finalized soon, the rupee could weaken further and fall to 92 against the U.S. dollar by March-end. Currently, the rupee is trading around 89.6 per dollar.

Foreign investors pulling money out:-

Another major reason for the rupee’s weakness is the steady exit of foreign investors. Global investors have been cautious about India this year, pulling out over $10 billion across different investments. Foreign portfolio investors (FPIs) have sold nearly $18 billion worth of Indian equities so far.

As long as this money continues to leave the country, the rupee is expected to stay under pressure. Experts say this decline is not due to India’s current account deficit, which is still manageable at around 1%–1.5% of GDP, but mainly because of weak investor sentiment.

What does a weak rupee mean?

A weaker rupee has both advantages and disadvantages:

Pros:

Indian exports become cheaper and more competitive globally

Can support exporters and manufacturing

Cons:

Imports become more expensive

Can increase inflation and cost of living

Creates uncertainty for investors

Low inflation in India has helped reduce some of the negative impact of a falling currency, but long-term weakness remains a concern.

RBI steps in:-

Earlier this month, the rupee crossed the 90-per-dollar mark, an important psychological level. It then quickly moved past 91 in just a few trading sessions. Although the Reserve Bank of India (RBI) has said it will allow market forces to decide the exchange rate, it reportedly stepped in aggressively to stop the rupee from falling too fast