The rupee closed the 2025 mark down 4.72% for the year, its worst performance since 2022 when it fell almost 10%.
Trading volumes were subdued due to the New Year holidays in major markets, leaving routine flows as the main driver of price action. Thursday’s move reflects the broader pattern seen through much of 2025, when underlying supply and demand dynamics kept pressure on the rupee.
“Until the 90 level is not broken, it is difficult to predict a clear direction for the currency,” said a trader with a brokerage.
“The rupee enters 2026 with both challenges and buffers. As global uncertainty persists, India’s strong macro fundamentals, ample reserves and pragmatic policy framework provide stability,” said Amit Pabari, managing director of currency consultancy CR Forex.
Progress on a pending trade deal between India and the US remains a potential upside catalyst and could provide a meaningful confidence boost if concluded, according to Pabari. The rupee is expected to trade between 89.30 and 90.20 in the near term, with a slight bias towards strengthening, he added. In the short term, market participants are watching stock flows to assess whether the year will evolve differently from 2025, when foreign investors pulled record amounts of money from the local stock market.
An improvement in equity flows would be key to easing the dollar’s supply-demand pressures that hurt the rupee in 2025, traders said.
#rupee #starts #weaker #demand #corporate #dollars