Indian rupee again came under pressure in the early trade on January 2 as the strong demand for dollar continues, decline in the offshore Chinese yuan, and foreign fund outflows by foreign portfolio investors, currency experts said.
At 10:50 AM, Indian rupee was trading 12 paise lower at 85.7625 against the US dollar, as compared to 85.7113 at open and 85.6488 at close in previous trading session against the greenback.
“Buying of dollar continues with FPIs net sellers in equities daily, and market waiting for trump inauguration to take the next call,” said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.
Adding to this, Dilip Parmar, a foreign exchange research analyst at HDFC Securities, said weaker yuan and PMI number slightly lower than previous numbers also put pressure on local currency.
On January 1, 2025, foreign institutional investors (FIIs) extended their selling as they sold equities worth Rs 1,782 crore on January 1, while domestic institutional bought equities worth Rs 1,690 crore on the same day.
Benchmark indices Nifty and Sensex extended their gains for second straight day on January 2, helped by gains in auto, IT, and bank stocks. Metal and realty stocks started off the trading session on a weak note.
During the weakening of rupee, the Reserve Bank of India intervenes to sell foreign currency and protect the rupee, which reduced the country’s foreign exchange reserves. India’s foreign exchange reserves declined by $8.478 billion to $644.391 billion as on December 20, 2024.
On January 1, Moneycontrol reported that Indian rupee is likely to remain under pressure in 2025 due to expectations of a strong dollar driven by the US Federal Reserve’s rate trajectory and US government policies under the new President.
Further, geopolitical tensions and the Indian Union Budget in February will be important factors influencing the rupee’s movement, experts added.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
