Re-reading this thread now is interesting. When @Mohseen_Usmani put this up in December, USDINR had just crossed 90 and @Goal_Archiver flagged 91 a week later. Five months on, we are sitting near 95. The original framing in this post (stronger dollar, FII outflows, import bill) all still holds up, but there is one piece that was not really on the table back in December and has become central to the story since.
Jefferies put out a note last week titled “INR Pressure – The Downside of SIPs” arguing that the real culprit for rupee weakness is not CAD, it is the capital account. Their point is that FPIs sold $44 billion of Indian equities since April 2024, but because domestic SIP flows kept absorbing every share they dumped, the index never broke. The pressure went somewhere though, and that somewhere was the rupee. Every dollar an FPI takes out has to be converted back to USD, and the SIP wall does not absorb that FX leg.
April 2026 AMFI data shows ₹38,440 crore of net equity inflow in just one month, which is roughly a quarter of what FPIs sold across all of FY26. So the absorption is real, the equity market stays stable, but the rupee carries the cost.
Wrote a longer breakdown of this with the Korea and Japan parallels here in case it is useful: Jefferies just blamed our SIP for the rupee’s fall. Is that fair?
@dazzler263 your point about quality of life ties into this directly. If domestic flows are now structurally setting up a weaker rupee floor, the imported inflation effect you described is not a cyclical thing anymore, it is becoming part of the baseline.
Do go through the new article, would love to know your insights on it.