The Indian rupee edged higher against the US dollar in Tuesday's trading session, closing with modest gains. The local currency appreciated by 3 paise to settle at 89.65 against the US dollar on December 23, 2025.
Factors Influencing the Rupee's Movement
Forex traders indicated that the rupee's upward movement was checked by significant external pressures. A key factor preventing sharper gains was a noticeable rise in global crude oil prices. As India is a major importer of crude, higher oil prices increase the nation's import bill, creating demand for US dollars and thereby exerting pressure on the rupee's value.
Simultaneously, the domestic forex market witnessed foreign capital outflows. This trend, where foreign investors pull money out of Indian assets, adds to the selling pressure on the rupee as investors convert their local currency holdings back into dollars.
Market Sentiment and Trader Insights
The day's trading reflected a cautious market environment. While some positive domestic cues provided initial support for the rupee, the combined weight of expensive oil and exiting foreign funds acted as a strong counterforce. Traders noted that these dual headwinds effectively capped the rupee's appreciation potential, leading to a subdued closing despite the positive bias.
The settlement level of 89.65 represents a marginal strengthening from previous sessions. Market participants are now closely monitoring international oil markets and global fund flow patterns, as these will be critical in determining the rupee's short-term trajectory against the greenback.
