The Indian rupee staged a recovery on Tuesday, appreciating by 14 paise to close at 90.16 against the US dollar. This upturn ends a four-day period of consecutive declines for the domestic currency.
Breaking the Downward Spiral
The rupee's rebound follows a weak closing on Monday at 90.30 per dollar. Market experts attribute the recent pressure to a combination of geopolitical tensions and a slump in domestic equity markets. The currency has been on a persistent downtrend, depreciating in nine of the last ten trading sessions.
Dilip Parmar, Research Analyst at HDFC Securities, explained the scenario to PTI. He stated that the rupee's weakness is driven by ambiguity in US-India trade pacts and a sluggish stock market caused by foreign capital leaving Indian shores. "A surge in geopolitical uncertainty had further boosted the dollar’s appeal," Parmar added, linking it directly to the detention of Venezuelan leader Nicolas Maduro by American forces over the weekend, which prompted a global flight to safe-haven assets like the US dollar.
Technical Levels and Broader Market Context
Parmar highlighted that the USD-INR spot pair is facing resistance near the 90.45 mark, while support is positioned around 89.90 for the near term. In the broader financial landscape, the dollar index, which gauges the greenback against six major currencies, was up 0.27% at 98.68. Simultaneously, Brent crude futures traded higher by 0.91% at $61.30 per barrel.
The rupee's journey in the new calendar year has been challenging. Since its close at 89.75 on December 30 last year, it has fallen by 55 paise. The year 2025 has seen the currency plunge by almost 5%, marking its weakest performance since 2022.
Forex Reserves and Future Outlook
In a positive development, India's foreign exchange reserves saw an increase. Data released by the Reserve Bank of India on Friday showed that reserves grew by $3.293 billion to $696.61 billion for the week ended December 26. This follows a rise of $4.368 billion in the previous week.
Looking ahead, State Bank of India (SBI) has forecasted further pressure on the rupee. The bank predicts the currency could decline by around 2% in the next financial year, with the exchange rate potentially hovering near 92 against the US dollar.
