INR: Indian rupee ends at record closing low

The Indian rupee (INR) weakened slightly on Wednesday, pressured by dollar bids from importers, which pushed the currency to a record closing low for the seventh consecutive session and affirmed the depreciation bias on the local unit.

The Indian rupee closed at 85.6450 against the U.S. dollar, down from its close of 85.6150 in the previous session.

Global cues were muted on the day, with most markets shut for the New Year holiday.

While the first trading session of 2025 was relatively lacklustre, traders expect the rupee to remain under pressure in the near term due to persistent strength in the dollar and domestic pressure on account of slowing growth and a wider merchandise trade deficit.

The dollar index touched a more than two-year peak of 108.58 on Tuesday before settling a tad lower, boosted by the prospect of higher-for-longer Federal Reserve interest rates and potential policy changes under incoming U.S. President Donald Trump.

“The Indian rupee is expected to face temporary pressure, likely trading within a range of 85.20 to 85.80,” said Amit Pabari, managing director at FX advisory firm CR Forex.

The currency declined to an all-time low of 85.8075 on Dec. 27 and weakened for the seventh consecutive year in 2024, largely on the back of a convergence of headwinds in the final quarter of the calendar year.

INR to USD: Indian Rupee Rate in Year 2024

Tepid capital flows have also been a pain point for the rupee. Foreign investors logged net purchases of only $124 million of Indian equities in 2024, down from $20.7 billion in 2023.

While inflows into bonds soared to a record high last year, investors reckon they are set to decline in 2025, with central bank interest rate trajectories in India and the United States and moves in the rupee being the key factors to look out for.