Rupee Muted Open Against Dollar Sets Stage For Drab End To Week

The Indian rupee opened weaker by 5 paise against the US dollar on Friday, starting the day at 85.80 as the currency continued its downward trajectory against the US dollar. The domestic unit has already dropped 0.28% in the week so far.

Rupee had weakened 10 paise to 85.75 on Thursday following a weak start. In the first trading session of 2025, the rupee had already weakened by 4 paise, closing at 85.65 after opening at 85.62. This follows a 7-paise drop on the final trading day of 2024, when the rupee ended at 85.61.

The rupee's ongoing weakness highlights the challenges it faces amid the strong US dollar and rising local demand for dollars.

Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, noted that the rupee remains in a weakening mode, driven by continued dollar demand. He added that exporters might hold off on selling the rupee, with a stop loss at 85.50, while importers are advised to buy the dips.

Bhansali also pointed out that the Reserve Bank of India intervened by selling $1 billion to protect the rupee from further weakening, particularly at the 85.78 level. He further mentioned that the rupee, compared to its peers, remains overvalued, contributing to its daily weakening to new record lows.

For the day, the rupee is expected to trade in the range of 85.60 to 85.90, as market participants keep a close watch on dollar demand, the forex expert said. The US dollar has been bolstered by expectations of fewer rate cuts and an outlook that the US economy will outperform its global counterparts.

The dollar index —an gauge to measure the greenback against a basket of other popular currencies— reached a high of 109.55 before retreating to 109.20 due to profit booking, with US 10-year yields holding steady at 4.5670%, Bhansali noted.