The rupee ended on a stronger note today after late trade recovery at 89.79 against the US dollar. Analysts reported that the currency gained strength, supported by equity market inflows into banking and financial stocks.
The rupee had opened near the 90 level at 89.93 and the currency slid through the day and stood at 89.94 in the afternoon session.
Rupee recovers: Soft metal prices aid sentiment
Further, the soft prices of metals such as gold, silver and copper also helped lift the currency. Prices of these metals witnessed a sharp drop on December 29, as peace plans for the Russia–Ukraine war progressed between the US and Ukraine. Additionally, China’s export restrictions, which are set to kick in from January 1, 2026, also added to volatility in metal prices.
Lower prices of silver and gold help reduce India’s import bill, which lowers importer demand for dollars. Reduced demand for dollars in the forex market supports the rupee.
Strong industrial production numbers released yesterday also provided a cushion for the currency. Growth in the Index of Industrial Production (IIP) accelerated to a 25-month high of 6.7% in November, driven by an 8% jump in manufacturing, strong consumption demand and a turnaround in the mining industry.
Growth in IIP numbers signals better economic momentum and higher investment confidence, which helps support the Indian rupee.
Rupee near the 90 level again
Traders added that the currency, which opened on a weak note in the morning, held ground due to RBI intervention, as the central bank sold dollars.
“The rupee remained on the weaker side since morning, but later yielded to constant selling by the RBI, which took it up to 89.72 before buyers came back and bought dollars. The rupee has been gravitating between 89.50 and 90 in the last few days, with the RBI for now protecting 90, but they will buy dollars at 89–89.20 to cover their short positions,” news agency PTI quoted Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, as saying.
Outlook for the rupee
Much of the trajectory of the Indian currency now depends on how a trade deal between India and the US shapes up. “Uncertainty around the India–US trade deal remains the key macro overhang. The rupee is likely to trade in the 89.70–90.40 range in the near term,” said Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities.
