Rupee’s Slide To New Lows Continues; Falls To 85.22 Against Dollar

The rupee opened at a record low of 85.22 against the US dollar on Thursday, weakening by 2 paise from its previous close of 85.20 on Tuesday. It further slipped by 3 paise during early trade, reflecting sustained downward trend amid global and domestic pressures.  

The weakness in the rupee comes as the dollar index remains elevated at 108.15, supported by persistent US inflation and geopolitical uncertainties. US 10-year treasury yields also held firm at 4.5940% in early post-Christmas trade, while Brent crude was trading at $73.36 per barrel.  

“The rupee remains in a weakening mode due to dollar demand. Exporters may continue to wait with a stop-loss at 85.05, while importers should buy on all dips,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP. 

The rupee briefly recovered to 85.21 in the non-deliverable forward market on Wednesday evening, likely due to Reserve Bank of India's intervention, said Bhansali. He also noted that the currency remains under pressure, with outstanding forex positions rising to $50 billion, an increase of $35 billion since October, according to the RBI's latest bulletin.  

CR Forex Advisors Managing Director Amit Pabari highlighted rising economic headwinds in the US, including increased unemployment and hiring slowdowns, as potential factors that could weaken the dollar in 2025.

“The dollar index is expected to remain elevated in the near term, potentially advancing toward 109.50. However, a breach of the 107.50 support level could lead to a decline toward 104, with a further slide to 100 anticipated next year,” he said.  

Pabari also pointed to domestic factors influencing the rupee's trajectory. “While RBI interventions may offer temporary relief, the rupee's movement will depend heavily on global monetary policies, particularly the Federal Reserve's actions, and India's domestic economic conditions.”  

Market participants are closely watching for further cues from US jobless claims data expected later today. For now, the rupee is expected to trade within a range of 85.10 to 85.40, with importers advised to hedge their positions on dips while exporters await better levels.