The Indian rupee experienced a significant decline in 2025, weakening by nearly 5 against the US dollar, its worst performance since 2022. SBI Funds Management attributes this to subdued foreign portfolio investor inflows, slow export growth, and high hedging demand from importers. Foreign investors withdrew approximately $18 billion from Indian equities due to earnings concerns, limited AI growth exposure, and better opportunities elsewhere. SBI anticipates relative stability for the rupee in 2026.