Rupee Opens Weaker Against US Dollar, Faces Continued Pressure
This follows a weaker close on the final trading day of 2024, when the rupee fell by seven paise, closing at 85.61 on Tuesday.
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Indian rupee opened weaker against the US dollar on Wednesday, first day of 2025, dipping 2 paise to 85.62, reflecting ongoing volatility in the currency markets. This follows a weaker close on the final trading day of 2024, when the rupee fell by seven paise, closing at 85.61.
The domestic currency had opened at 85.59 on Tuesday, a 5-paise dip from its previous close of 85.54. It then further weakened by 9 paise, mirroring the challenges faced by the rupee as it continues to grapple with fluctuations in global dollar strength and local demand pressures.
Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, highlighted the ongoing volatility, noting that the rupee’s movement remains constrained by persistent dollar demand. He predicts a trading range for the day between 85.40 and 85.70, signaling a continued weaker trend for the rupee.
According to Bhansali, exporters might hold back from selling the rupee and could set a stop loss at 85.25, as the currency remains under pressure. Importers, on the other hand, are advised to buy dollars on any dips.
Despite the rupee’s downward movement, Bhansali pointed out that the Reserve Bank of India had intervened to support the currency, with the rupee being protected at 85.6450 in the previous session.
Additionally, with US markets closed for the day, Bhansali suggests that cash dollar demand will be muted, potentially reducing short-term pressures on the rupee. However, he advises importers to seize any lower openings on the USD/INR pair as an opportunity to buy dollars for their payables.
On a broader economic note, Bhansali also pointed to India’s fiscal deficit standing at 52.5% of the budgeted target for 2024-25 as of November, along with a 4.3% growth in the country’s core industries for the same month. These domestic economic indicators continue to influence the rupee's outlook, with the currency likely to remain sensitive to both domestic developments and global market conditions.
