Rupee closes flat at 85.64 against the US dollar in the first trading session of 2025

The rupee ended the first trading session of 2025 unchanged at 85.64 against the US dollar. Gains from positive domestic equities were neutralized by persistent foreign fund outflows, leaving the currency stagnant.

At the interbank foreign exchange market, the rupee opened at 85.63 and hit an intraday low of 85.72 before recovering slightly to close flat. The previous session saw the rupee reach an all-time closing low of 85.64 on December 31, 2024. The local currency's lifetime intraday low of 85.80, touched on December 27, remained unchallenged.

RBI steps in to stabilize the rupee
Market participants noted intervention by the Reserve Bank of India (RBI), which sold dollars near the 85.72 level to support the rupee. This intervention ensured limited volatility during a low-volume trading day, influenced by a US holiday and subdued corporate participation.

Broader market and global influences
The dollar index (DXY), which measures the US dollar's strength against a basket of currencies, was steady at 108.48. The US 10-year treasury yields stood at 4.57 per cent, maintaining upward pressure on the greenback. Brent crude oil prices hovered at USD 74.64 per barrel.

On the domestic front, the Sensex climbed 368.40 points (0.47 per cent) to close at 78,507.41, while the Nifty gained 98.10 points (0.41 per cent) to settle at 23,742.90.

Foreign fund outflows persist
Foreign Institutional Investors (FIIs) continued to sell, with net outflows of Rs 4,645.22 crore in the capital markets on December 31, 2024.

Fiscal deficit update
India’s fiscal deficit for April-November 2024 stood at Rs 8.47 lakh crore, accounting for 52.5 per cent of the full-year target, according to data from the Controller General of Accounts (CGA).

As the rupee remains vulnerable, market watchers anticipate cautious trading in the near term amidst global and domestic challenges.