The Indian rupee weakened against the US dollar in the final trading sessions of 2025, closing lower on Monday. The domestic currency shed 8 paise to settle at 89.98 against the US dollar on December 29, 2025.
Key Factors Behind the Rupee's Decline
Forex market analysts pointed to two primary pressures weighing on the rupee's valuation. The most significant factor was the ongoing withdrawal of funds by foreign portfolio investors. This persistent capital outflow from Indian markets created sustained selling pressure on the local currency.
Simultaneously, heightened demand for the US dollar from domestic importers added to the downward momentum. Importers actively sought dollars to meet their international payment obligations, which further amplified the rupee's weakness during the session.
Market Sentiment and Trader Perspectives
The combination of these factors collectively dented investor sentiment in the currency market. Traders noted that the environment was characterized by caution, with participants reacting to the dual headwinds of foreign capital flight and robust dollar demand.
While the movement of 8 paise represents a moderate shift, it underscores the underlying vulnerabilities and the currency's sensitivity to global fund flows and trade-related dollar requirements. The closing level of 89.98 marks a key threshold for the rupee as it approaches the psychologically significant 90 mark against the greenback.
Implications and Forward Outlook
The day's performance highlights the ongoing challenges for the rupee in the global financial landscape. The trend of foreign investor withdrawals remains a critical monitorable for market watchers, as it directly influences currency liquidity and valuation.
Market participants are likely to keep a close watch on future foreign investment data and domestic import trends to gauge the rupee's near-term trajectory. The interplay between these forces will continue to be a major determinant of the Indian currency's strength in the forex market as the new year approaches.
