Rupee falls 9 paise to 85.61 against U.S. dollar in early trade

Rupee weakens to 85.61 against the dollar due to strong US currency, trade deficit, and foreign fund outflows.

The rupee dropped 9 paise to 85.61 against the U.S. dollar in early trade on Tuesday (December 31, 2024), weighed down by significant strengthening of the American currency in the overseas market and a muted trend in domestic equities.

Forex traders said the rupee has been under continued pressure amid the Federal Reserve's cautious stance and the "Trump factor" driving up the dollar index (DXY) and US 10-year yields.

Additionally, on the domestic front, slowing growth, widening trade deficit, and persistent foreign fund outflows have further fueled the rupee's depreciation.

At the interbank foreign exchange, the rupee opened on a weak note at 85.54 then fell further to 85.61 against the American currency, registering a fall of 9 paise over its previous close, on month-end dollar demand from importers and oil marketing companies.

On Monday (December 30, 2024), the rupee dropped 4 paise to 85.52 against the U.S. dollar.

According to Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP, the US Dollar stood tall in 2024 and recorded strong gains against most currencies, as investors braced for fewer US rate cuts and the incoming Trump administration's policies.

"It would be posting strong gains in 2024 against most currencies and its gains have been buoyed by rising treasury yields, a falling yen and European currencies," Mr. Bhansali said.