Rupee slips 2 paise to close at 84.49 against dollar, marking worst month since March

Indian rupee declined by two paise on Friday, settling at 84.49 against the US dollar, pressured by persistent foreign fund outflows and month-end dollar demand from importers. This comes after the rupee logged its worst monthly performance since March, falling 0.5 percent in November, reflecting global dollar strength post the U.S. election results and geopolitical tensions.

The currency touched an intra-day low of 84.50, just shy of its lifetime closing low recorded on November 21. Over the month, the rupee faced headwinds from strong dollar demand and steady foreign institutional investor (FII) outflows, totaling Rs 11,756.25 crore on Thursday alone.

Global cues weigh on rupee

Forex traders cited a robust dollar, fueled by heightened U.S. economic resilience and geopolitical concerns, as a significant drag on the rupee. Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, noted, “We expect the rupee to trade with a negative bias on a strong dollar and geopolitical tensions between Russia and Ukraine. Any surge in crude oil prices amid these tensions may also weigh on the rupee.”

Silver linings support the currency

The rupee’s losses were cushioned by positive domestic equities and softer crude oil prices. Brent crude, the global benchmark, fell 0.30 percent to USD 73.06 per barrel in futures trade. The dollar index, which measures the greenback's strength against six currencies, softened by 0.15 percent to 105.88.

Choudhary added, “A positive tone in domestic markets and RBI intervention may support the rupee at lower levels. USD-INR is expected to trade in a range of 84.35 to 84.70.”

Markets and outlook

India's Q2 FY25 GDP data remains a critical cue for traders, alongside crude oil dynamics and month-end importer demand. The Sensex jumped 759.05 points, ending at 79,802.79, while Nifty closed 216.95 points higher at 24,131.10.

With the rupee’s trajectory facing headwinds, markets will keep an eye on further RBI measures and global developments impacting the dollar.