ET NEWS

Mumbai: The rupee was the worst performer in Asia against the US dollar in FY26, shows an ET analysis of 10 rival currencies, after the local unit lost 9.88% through a year marked by record exits from Indian equities by overseas investors amid a global scramble for dollar-based assets. Opening the financial year at 85.59 per dollar, the rupee ended at 94.83. 129938838 Yen Second Worst-performing This is after the local currency touched a record low of 95.22/$ amid consistent dollar demand throughout the year. Foreign portfolio investors pulled out a record ₹1.6 lakh crore, far exceeding withdrawals in FY22, data from NSDL data showed. Unrelenting demand for dollars from foreign investors forced the Reserve Bank of India (RBI) to intervene in the market by selling dollars to prevent a sharp fall in the rupee. The Japanese yen, which fell 6.27% against the dollar, was the second worst-performing Asian currency in FY26. By contrast, the Malaysian ringgit gained 9.69% - the best performer on the regional leader-board. Alok Singh, head of treasury, CSB Bank, expects the rupee to remain under pressure in the half of FY27 before the unit recovers some of its losses and trades in the broad 91-94 per dollar band for the fiscal year. Bankers said the latest RBI measures would support the rupee. "Capping of banks' net open position by RBI will help curb speculative trades and prevent a sharp depreciation in the rupee, but the near-term outlook is weak and a little fuzzy due to the Iran conflict, as the dollar-rupee rate will correlate with what happens there," said Alok Singh. In a drastic measure to prevent a sharper fall in the rupee, RBI on March 27 asked banks to cap their net open rupee positions in the onshore deliverable market to $100 million at the end of each business day, effective April 10, far lower than the 25% of total capital limit earlier. Despite this, the rupee fell to cross the 95 mark on the last day of trading. "For now, chances are that the rupee may weaken below 95 per dollar toward 96 or even 97. Persistent dollar outflows and higher oil prices have definitely shifted the rupee band more toward 92-93 per dollar, from the 89-90 expected before this crisis," Singh said. Through FY26, RBI maintained that it intervened in the spot market to prevent volatility.

Mumbai: Foreign institutional investors (FII) withdrew more than ₹1.6 lakh crore from Indian equities in FY26 - the highest in a financial year - although a record ₹8.5 lakh crore of fresh commitments from domestic funds formed the ideal rearguard against the potentially debilitating FII exits through the worst rupee rout in 14 years. For overseas buyers, Indian risk assets in FY26 appeared to have been caught in the perfect storm due to the Iran conflict, a lingering uncertainty on tariffs, relatively expensive valuations, an AI-led decline in the business prospects of a $280-billion technology industry, and about 10% rupee slide against the dollar. FY26 marks the second consecutive financial year of FII outflows and fourth in the previous five years, data from ETIG showed. Last year, FIIs withdrew ₹1.24 lakh crore from stocks and were on track to pull out a similar amount this fiscal year too. But their pace of exit accelerated in March after the start of the Iran war, with the rupee losing 4% in as many weeks. "Since March, the West Asia war raised risk-off sentiment that amplified the sell-off substantially," said Rupen Rajguru, head, equity investment and strategy, Julius Baer India. 129938805 Domestic Appetite "The weak currency is a big factor that eats into the returns of foreign investors and keeps foreign capital at bay this year," said Rajguru. Flows from domestic institutions - led by mutual funds, pension funds and insurers - into the stock market have been on an uptrend in the past five years. Their FY26 investments of ₹8.49 lakh crore exceeded total flows into equities in the previous two financial years, underscoring the domestic appetite for stocks despite the market sell-off. Nifty and Sensex fell 5.1% and 7.1%, respectively, in the fiscal year. Both indices would have ended marginally higher or with modest losses but for the near 9.5% retreat in March - the worst monthly fall since 2020, the onset of the pandemic. "Typically, one year of losses triggers domestic outflows, but this time, SIP (systematic investment plan) flows have remained largely steady despite 18 months of losses," said Rajguru. Retail investors have pumped ₹29,000 crore every month on average into domestic equity schemes in the past financial year. The return of foreign portfolio flows into India in the new financial year would depend on stability in the rupee, peace in West Asia and a decline in crude prices though a rush of overseas investments seem unlikely. "Given the uncertainties arising out of the war on energy disruption and global reversal of interest rate cycle, the FPI flows are not expected to be positive immediately in the near future," said Rajesh Iyer, managing director, global investment solutions and asset management, at LGT Wealth India. Foreign institutional ownership of Indian companies is at a decadal low, and valuations are around 17 times the estimated price-to-earnings (PE) ratio, below the ten-year average, said Rajguru of Julius Baer India. "A lot of the damage is already done," he said.

Mumbai: Banks are increasingly giving loans to borrowers rated prime and above, latest data from an assessor focused on individual credit showed, indicating risk aversion among lenders at a time when job expansions at corporate India have become rather tentative amid an AI-led onslaught on repetitive tasks.Data from credit bureau TransUnion CIBIL showed that the bulk of new loan originations are concentrated among borrowers with a CIBIL score of 730 and above. The shift away from riskier segments is also evident in the declining share of new-to-credit customers, whose proportion of total originations has fallen sharply to 16% in January 2026 from 22% two years ago."The industry's preference for prime and above has gone up and at the same time, the industry is preferring existing-to-credit customers," said Bhavesh Jain, MD and CEO, TransUnion CIBIL. "The industry is preferring higher ticket size loans. Within existing credit also, we have seen an increasing trend where lenders are preferring existing-to-lender, or existing-to-bank or existing-to-NBFC, because the loan amounts are very high."Despite the cautious lending environment, overall credit market health has improved. TransUnion CIBIL's March 2026 Credit Market Indicator (CMI) rose to 102 for the quarter ended December 2025, up from 97 in the same quarter of the previous year. The improvement was driven largely by better asset quality, with balance-level 90-plus days past due (DPD) delinquencies improving across key product segments, pushing the CMI's performance sub-index up six points to 107 in December 2025 from 101 a year earlier.The sole area of stress was the micro-loan against property (LAP) segment, where balance-level 90-plus DPD delinquency rose 35 basis points year-on-year to 3.1% in December 2025 - though levels have remained broadly stable and range-bound since the previous quarter.On the supply side, the CMI rose to 98 in the December 2025 quarter from 91 in the December 2024 quarter, propelled by a surge in gold loan volumes and values. Rising gold prices have encouraged consumers to avail higher-ticket gold loans, with the average gold loan ticket size growing 1.8 times since March 2023. The indexed growth in average gold loan ticket size touched 189 points in the December 2025 quarter, compared to 132 in the same quarter of the previous year, with the average ticket size for the three months ended December 2025 standing at ₹1.9 lakh.Gold loans now account for the largest share of retail lending by both volume (36%) and value (39%) - more than a third of total retail loan supply - and in terms of outstanding balances, are now second only to housing loans.

Mumbai: Indian exporters have received a fresh jolt with container shipping lines raising rates by as much as 40% in most cases to compensate for rising fuel costs and higher insurance premiums on account of the Iran war that is lasting longer than the industry expectations, according to executives.These hikes, the second in the past month, are likely to last longer than the previous one which was in effect for weeks as companies are not sure of the longevity of the conflict.Container shipping rates for Indian exports to Europe are set to rise by up to $1,000 per container from April 1, as Mediterranean Shipping Company (MSC), AP Moller-Maersk A/S and CMA CGM SA roll out increases across key trade lanes."The combination of base increases, ECS (emergency conflict surcharge) and war-risk surcharges is forcing exporters to reassess costs," said a Mumbai-based freight forwarder. "Even routine shipments now carry a price tag that reflects full rerouting and security premiums."MSC has increased base freight by a flat $1,000 per 20-foot container on shipments from Nhava Sheva, Ennore, and Kolkata to North Europe and the Mediterranean. Rates from Nhava Sheva to Antwerp will jump to $3,150, up 46.5% from $2,150 mid-March, while shipments to Valencia will rise 44.4% to $3,250. Ennore-to-Antwerp and Kolkata-to-Antwerp shipments will see hikes of 42.6% and 40.8%, respectively.Maersk is hiking its ECS by $200 per container across overlapping Indian subcontinent-Europe lanes. ECS on northwest India shipments to North Europe will rise 40% from $500 to $700, while shipments from south and east India, Sri Lanka, and Maldives to the same destinations will rise 20-22%. Bangladesh-to-Europe ECS will climb 14-18%. CMA CGM has set a new freight all kinds (FAK) benchmark at $4,600 for East Mediterranean routes, while cutting rates to Algeria by 8%.Backhaul trades from Europe to the Indian subcontinent are also firming. CMA CGM has raised rates by $150 per container, translating to 11-26% increases across North Europe and Mediterranean corridors.