Rupee falls 1 paisa to 85.87 against US dollar

On January 10, 2025, the Indian rupee depreciated by 1 paisa, settling at 85.87 against the US dollar. The decline was mainly attributed to a strong US dollar, supported by a rise in the dollar index, and significant foreign capital outflows. Despite the rupee's weakness, positive domestic equity market trends provided some support.

Impact of strong US dollar and foreign outflows

Forex traders noted that the firm American currency had a notable influence on the rupee's fall. The dollar index, which measures the greenback's strength against six major currencies, rose by 0.03 per cent, reaching 109.03. Additionally, foreign institutional investors (FIIs) continued to offload investments, with a net outflow of Rs 7,170.87 crore from the Indian capital markets on Thursday.

Crude oil prices add pressure

Another factor weighing on the rupee was the rise in global crude oil prices. Brent crude futures rose by 0.31 per cent, reaching USD 77.16 per barrel. As oil imports become costlier, they increase the demand for US dollars, further exerting pressure on the Indian currency.

Domestic equity market provides support

On a positive note, domestic equity markets showed resilience, which helped partially offset the rupee's losses. The benchmark BSE Sensex rose by 253.40 points, or 0.33 per cent, to 77,873.61, while the Nifty climbed 62.60 points, or 0.27 per cent, to 23,589.10.

Outlook and future trends

Looking ahead, forex experts expect the rupee to continue facing challenges due to persistent dollar strength and external pressures like crude oil prices. However, any positive domestic economic cues could provide support to the currency. The rupee had shown a brief recovery on Thursday, rising by 5 paise to close at 85.86 after a significant decline in the prior session.