The Swiss superstar had been scheduled to play for the Indian Aces in the lucrative International Premier Tennis League
(IPTL) in Hyderabad, India on December 10.
But on Tuesday, IPTL founder and managing director Mahesh Bhuphathi said Federer and also 22-time grand slam singles champion Serena Williams wouldn't be competing in the event after all.
"With the current economic climate in India and the uncertainty of spending money, I reached out to both Roger and Serena to explain the situation," former doubles player Bhupathi said in an emailed statement.
"They have been both been very supportive of the IPTL the first two seasons and we look forward to bring them in future years."
That means Federer fans will now have to wait until January 2 to see the 17-time grand slam winner in action. He's scheduled to play Dan Evans and Heather Watson of Great Britain in the mixed team Hopman Cup in Perth, Australia alongside fellow Swiss Belinda Bencic.
Last month, Indian Prime Minister Narenda Modi abruptly announced that two of the country's biggest banknotes would cease to be legal tender -- intended to wield out corruption in a country where at least 80% of all transactions are done in cash -- has led to chaos.
Indian banks have found themselves short on cash with low earners in particular struggling to make payments. The Indian currency, the rupee, slumped to a record low against the US dollar.
"Considering the IPTL is mainly run by Indians (and team owners are mostly Indians as well), that has had a big and negative impact (the demonetization)," an IPTL spokesman said by email Tuesday.
He added: "Ticket sales are down and the value obviously is less so not really worth enough to pay the big stars to come to India this year."
Scaled down IPTL
Now in its third year, the IPTL scaled down to four teams from five this season.
The IPTL said it will be working with KPMG, its auditor in the past two years, to build a business plan and raise funds to become more financially stable in the future.
IPTL organizers said they've already been given "verbal commitment" by Federer, Williams and also nine-time French Open winner Rafael Nadal that they'll be back playing in the league next year.
Although Federer and Williams won't be playing this week, tennis fans can still see stars including India's top-ranked doubles player Sania Mirza in action for the Indian Aces and Japanese superstar and world No. 5 Kei Nishikori for the Japan Warriors in the IPTL this month.
Federer, 35, hasn't played since he lost to Canada's Milos Raonic in the semifinals of Wimbledon in July.
Less than three weeks after his defeat at the All England Club, Federer said he would not play for the rest of the season to rest his knee. The Swiss, a father of two sets of twins, had undergone knee surgery in February after tearing his meniscus while giving his children a bath.
Williams, 35, hasn't played competitively since losing to Karolina Pliskova in the semifinals of the US Open in September.
The American, who lost her No. 1 ranking to Germany's Angelique Kerber after the US Open, missed the entire Asian swing in October and November because of a shoulder injury.