The rupee rose 3 paise to 89.95 against U.S. dollar in early trade on Tuesday (December 20, 2025), buoyed by a weaker greenback and strong IIP numbers.

However, FII outflows, marginally higher crude oil prices, and a weaker opening in the domestic equity markets capped sharp gains in the local unit, forex traders said.

At the interbank foreign exchange, the rupee opened at 89.98 against the US dollar before rising to 89.95, up 3 paise from its previous close.

The rupee depreciated 8 paise to close at 89.98 against the U.S. dollar on Monday.

“The RBI (on Monday) protected the top end of the curve while FPIs who sold equities also were dollar buyers, keeping bids on for the full day and taking it almost to 90 levels,” Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.

Mr. Bhansali further cited strong Index of Industrial Production (IIP) data, which was released on Monday.

“The IIP came at a 25-month high of 6.7% for November against expectation of 2.5% and last month growth of 0.5%. The growth during the year has been 3.30% against 2.70% in the last month,” he said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading marginally down by 0.03% at 98.01.

Brent crude, the global oil benchmark, was trading 0.03% higher at $61.96 per barrel in futures trade, amid thin year-end trading and ongoing concerns about global demand.

On the domestic equity market front, the 30-share sensitive index Sensex declined 209.32 points to 84,486.22 in early trade while the Nifty was down 63.25 points to 25,878.85.

Foreign institutional investors offloaded equities worth ₹2,759.89 crore on Monday, according to exchange data.

The rupee slumped 28 paise to an all-time low of 90.43 against the U.S. dollar in early trade on Thursday (December 4, 2025), amid substantial Foreign Institutional Investor (FII) outflows and restrained intervention from the Reserve Bank of India (RBI).

Forex traders said that restrained Central Bank intervention ahead of the crucial Monetary Policy Committee (MPC) decision and significant dollar demand from importers have exerted persistent downward pressure on the rupee.

At the interbank foreign exchange market, the rupee opened at 90.36. It slipped further to a record low of 90.43 against the dollar in initial deals, registering a loss of 28 paise from its previous closing level.

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On Wednesday, the rupee breached the 90-levels for the first time to settle at a fresh all-time low of 90.15 against the greenback.

Meanwhile, Chief Economic Adviser (CEA) V. Anantha Nageswaran on Wednesday said the falling rupee is not affecting inflation or exports.

A falling rupee helps outward shipment but makes imports costlier.

Import-dependent sectors such as gems and jewellery, petroleum and electronics may see lower benefits due to a rise in input costs, putting pressure on inflationary expectations, Mr. Nageswaran said at an event on Wednesday.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.14% higher at 98.99.

Brent crude, the global oil benchmark, rose 0.49% to $62.98 per barrel in futures trade.

Forex traders believe investors are adopting a cautious stance amid ongoing trade tensions with the U.S., with expectations of a settlement towards the end of the year.

“It seems that until the trade deal comes, we may see the rupee weaken further, and it may reach the levels of 91.00 soon. With a weak rupee, we do not expect the RBI to cut rates on Friday,” said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.

On the macroeconomic front, India’s GDP has already surprised on the upside, and the latest HSBC India Services PMI — a key index that measures whether businesses are growing or slowing — rose to 59.8 in November, supported by strong new orders.

“But the currency market isn’t trading on growth headlines anymore. It wants stability, clear policy guidance and maybe a trade deal that doesn’t keep slipping away,” said CR Forex Advisors MD Amit Pabari.

Mr. Pabari further added that “now all eyes turn to RBI Governor Sanjay Malhotra on December 5. Investors aren’t just listening to rate decisions. They want to hear his voice on the rupee.” The decision of the RBI Governor Sanjay Malhotra-headed six-member rate-setting panel will be announced on Friday.

The meeting is taking place against the backdrop of falling inflation, rising GDP growth, the rupee crossing 90 against the dollar and ongoing geopolitical tensions.

On the domestic equity market front, Sensex rose 45.99 points to 85,152.80 in early trade, while Nifty was up 14.35 points to 26,000.35.

FIIs sold equities worth ₹3,206.92 crore on a net basis on Wednesday, according to exchange data.