The rupee closed 7 paise lower at 85.11 against the US dollar on Monday, weighed down by a stronger greenback and rising crude oil prices. This decline came despite a sharp recovery in domestic equities.
Factors impacting the rupee
Forex traders attributed the weakness to strong demand for the US dollar, coupled with elevated crude oil prices due to geopolitical uncertainties. The US Federal Reserve’s cautious stance on rate cuts in 2025 also bolstered the dollar index, which rose 0.38 percent to 107.75.
Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, highlighted the role of Foreign Institutional Investor (FII) outflows and the impact of a weaker Chinese yuan in pressuring the rupee.
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Trading highlights
The rupee opened at 85.02 at the interbank forex market, hit an intraday low of 85.13, and finally settled at 85.11. On Friday, it had ended 9 paise higher at 85.04 after touching an all-time low earlier in the week.
“USD-INR spot prices are expected to trade in a range of 84.90 to 85.15 in the near term,” Choudhary added, noting that upcoming US CB consumer confidence data may influence the rupee’s trajectory.
Crude oil and forex reserves
Brent crude prices edged up 0.07 per cent to USD 72.99 per barrel, adding to the pressure on the rupee. Meanwhile, India’s forex reserves declined by USD 1.988 billion to USD 652.869 billion for the week ended December 13, as per RBI data.
Domestic market performance
On the domestic front, the BSE Sensex gained 499 points to close at 78,540, while the Nifty rose 166 points to settle at 23,753. However, FIIs remained net sellers on Friday, offloading shares worth Rs 3,597.82 crore.
The rupee’s performance continues to be influenced by global and domestic factors, with traders keeping a close watch on crude oil prices and foreign fund flows.
