The Indian rupee fell to a record low of 95.31 against the US dollar on Monday, as foreign portfolio investors pulled nearly $844 million out of Indian equities in a single session. The selling triggered heavy demand for dollars as investors converted their rupee proceeds to repatriate funds abroad, pushing the currency to its weakest level on record.

What Drove the Slide

When foreign investors sell Indian stocks, they receive rupees. To send that money home, they convert those rupees into dollars, which directly increases demand for the US currency and puts downward pressure on the rupee. A single-day outflow of $844 million is large enough to move the exchange rate noticeably, especially if the Reserve Bank of India does not step in to offset the demand.

The scale of Monday's FPI selling suggests investors were making a deliberate exit rather than routine portfolio adjustments. Whether that reflects global risk aversion, a reassessment of Indian market valuations, or broader emerging-market outflows is not clear from available information, but the size of the move points to coordinated or sentiment-driven selling rather than isolated trades.

What This Means for Markets and the Economy

A weaker rupee raises the cost of imports priced in dollars, most notably crude oil, which India buys almost entirely from overseas. Higher import costs feed through to fuel prices, freight costs, and eventually consumer prices more broadly. Companies with dollar-denominated debt also face higher repayment burdens when the rupee weakens.

For equity markets, sustained FPI outflows can weigh on index performance and sentiment. Domestic institutional investors often step in to absorb some of that selling, but a record low in the currency can signal that outflows are outpacing any such support.

The rupee hitting a record low also puts the Reserve Bank of India in a difficult position. The central bank typically intervenes by selling dollars from its foreign exchange reserves to stabilize the currency, but repeated interventions draw down those reserves over time.

Investors and analysts will be watching whether Monday's outflow is a one-off event or the start of a sustained exit by foreign investors, and whether the RBI moves to defend the currency at or near current levels.