The rupee witnessed range-bound trade in the morning session on Friday (January 2, 2026), appreciating by 6 paise to 89.92 against the US dollar as thin liquidity conditions accentuated everyday demand-supply imbalances, keeping the rupee tilted toward weakness.

Forex traders said the USD/INR pair is expected to trade in a narrow range as the 90 level is being protected by the Reserve Bank of India.

Moreover, the support from positive domestic equities was offset by sustained foreign fund outflows.

At the interbank foreign exchange market, the rupee opened at 89.95 against the U.S. dollar, then gained some ground and touched 89.92, rising by six paise from its previous close.

On Thursday, the rupee depreciated 10 paise to close at 89.98 against the U.S. dollar.

“Unless RBI comes and sells dollars heavily, the movement is going to be in small ranges as seen in the last three sessions. The pair is seen in a holding pattern between 89.80 and 90, considering the narrow range,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.

Bhansali further noted that corporate demand, FPI demand, and government demand have been the salient features of the rupee over the past year, during which it fell by more than 5% and became the worst-performing Asian currency, though partly protected by the RBI.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading marginally down by 0.15% at 98.17.

Brent crude, the global oil benchmark, was trading 0.38 per cent higher at $61.08 per barrel in futures trade.

“With early-year liquidity still thin and domestic fundamentals offering a mixed but stable backdrop, the rupee appears set to remain range-bound in the near term. As long as USD/INR stays below the 90 handle, the balance of risks tilts mildly in favour of the rupee,” CR Forex Advisors MD Amit Pabari said, adding that against this backdrop, USD/INR is expected to trade in a 89.30–90.20 range.

On the domestic equity market front, the 30-share benchmark index Sensex climbed 158.19 points to 85,346.79 in early trade, while the Nifty was up 55.8 points to 26,202.35.

Foreign institutional investors offloaded equities worth Rs 3,268.60 crore on Thursday, according to exchange data.

On the domestic macroeconomic front, gross GST collections rose 6.1% to over ₹1.74 lakh crore in December 2025, on slow growth in revenues from domestic sales following the sweeping tax cuts, according to government data released on Thursday (January 1, 2026).

Gross Goods and Services Tax (GST) revenue in December 2024 was over ₹1.64 lakh crore.

The rupee appreciated 40 paise to close at 86.99 (provisional) against the U.S. dollar on Tuesday (August 19, 2025), supported by optimism over GST restructuring and positive domestic equity markets.

Forex traders said rupee is expected to trade with a positive bias as easing worries over additional tariffs by the U.S. boosted market sentiments after the meeting between U.S. President Donald Trump and Russian President Vladimir Putin.

At the interbank foreign exchange market, the rupee opened at 87.24 against the U.S. dollar, touched an intraday low of 87.31 and a high of 86.92, and settled at 86.99 (provisional), registering a gain of 40 paise over its previous close.

On Monday (August 18, 2025), the rupee appreciated 20 paise to close at 87.39 against the U.S. dollar.

“The Indian rupee rose to the highest levels in a month on optimism over GST restructuring as announced by Prime Minister Narendra Modi at the Independence Day speech. Easing worries over additional tariffs by the U.S. also boosted market sentiments,” said Anuj Chaudhary, Research Analyst, Commodities and Currencies, Mirae Asset Sharekhan.

The present GST tax rates of nil/zero on essential food items, 5% on daily use products, 12% on standard goods, 18% on electronics and services and 28% on luxury and sin goods will be replaced by two tax slabs of 5% and 18%, plus a special 40% top bracket for 5-7 demerit goods.

The proposed two-slab regime, if approved by the GST Council, will replace the current four slabs in the Goods and Services Tax (GST) regime, doing away with the 12% and 28% slabs.

“We expect the rupee to trade with a positive bias on upbeat domestic market sentiments due to GST rationalisation and fading trade tariff concerns. Falling crude oil prices and overall weakness in the greenback may also support the rupee,” Mr. Chaudhary said.

However, increased demand for the dollar by importers may cap sharp gains. Traders may take cues from building permits and housing starts data from the U.S. USD-INR spot price is expected to trade in a range of 86.70 to 87.40, Mr. Chaudhary said.

Meanwhile, Brent crude, the global oil benchmark, was trading lower by 1.04% at $65.91 per barrel in futures trade, amid cautious optimism around the Ukraine-Russia conflict.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, was lower by 0.13% at 98.04.

On the domestic equity market front, Sensex climbed 370.64 points to settle at 81,644.39, while Nifty rallied 103.70 points to 24,980.65.

Foreign Institutional Investors bought equities worth ₹550.85 crore on Monday (August 18, 2025), according to exchange data.