Slide Spree: Rupee Ends Weaker Against US Dollar

The rupee ended weaker against the US dollar on Thursday, declining by 10 paise to close at 85.75. This marks a continued weakening trend for the rupee, which has been grappling with global dollar strength and domestic demand pressures.

The domestic rupee opened weaker by 6 paise at 85.71 against the US dollar on Thursday, continuing its decline from the previous session. 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, reflecting ongoing volatility amid global dollar strength and local demand pressures.

Kunal Sodhani of Shinhan Bank highlighted that the first resistance for USD/INR is at the all-time high of 85.81, with a potential breakout pushing the pair to the psychological 86.00 level. On the downside, the 85.45 level, now acting as support, could be the first target.

In times of sharp depreciation, the Reserve Bank of India typically intervenes by selling foreign currency to protect the rupee, which can deplete the country's foreign exchange reserves. India's reserves fell by $60.5 billion to $644.39 billion in the week ending December 20, 2024, from a record high of $704.89 billion.

Meanwhile, Citi Research raised its target prices for major Indian IT stocks such as Tata Consultancy Services, Infosys, and Wipro, benefiting from the rupee's depreciation boosting software export revenue.

The rupee took 14 months, from September 2023 to October 2024, to weaken from 83 to 84 per dollar but only two months to drop below the 85 mark. Despite the drop, the rupee remains among the low-volatility currencies, ranked below the Chinese yuan, Malaysian ringgit, Indonesian rupiah, and Philippine peso, according to Bloomberg data.