The rupee closed at 85.6150 to the U.S. dollar, down nearly 0.1% on the last trading day of the year. The unit fell 2.8% in 2024 to post a seventh consecutive annual decline.
Asian currencies were mostly weaker with the offshore Chinese yuan down 0.6% at 7.35, its weakest level in over a year, after data showed that China’s factory activity barely grew in December.
The dollar index dipped 0.1% to 107.9 while U.S. bond yields were a tad lower in Asia trading.
For the session, the rupee remained under pressure amid dollar bids from foreign and state-run banks, traders said.
A hawkish shift in the Federal Reserve’s policy outlook combined with expectations over incoming U.S. President Donald Trump‘s policies has boosted the dollar and U.S. yields while India’s slowing economic growth has added to the pressure on the rupee. “Looking ahead to 2025, the Indian rupee is expected to remain relatively stable in the context of Asian currencies, with a modest depreciation expected,” said Dilip Parmar, a foreign exchange research analyst at HDFC Securities. Parmar expects the rupee to trade between 84 and 87 over 2025, influenced by the interest rate differential between India and the U.S., foreign portfolio flows and India’s economic fundamentals.
In the near-term, investors’ focus will be on U.S. labour market data due next week and Donald Trump taking charge for his second U.S. presidential term on Jan. 20.
