CA Sansaar
Rupee Stumbles at Start of 2026 Despite Strong Macroeconomic Buffers
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The Indian rupee began the new year on a weaker footing, depreciating by 11 paise to 89.99 against the U.S. dollar during early trade on Thursday (January 1, 2026), pressured by continued foreign capital outflows.
According to forex market participants, the rupee enters 2026 amid a mix of headwinds and support factors. While global uncertainties remain elevated, India’s robust macroeconomic fundamentals and comfortable foreign exchange reserves are expected to provide a degree of resilience.
In the interbank foreign exchange market, the domestic currency opened at 89.94 against the U.S. dollar before slipping further to touch 89.99, marking an 11-paise decline from its previous close. In the final trading session of 2025 on Wednesday (December 31), the rupee had settled at 89.88 against the greenback.
Commenting on the outlook, CR Forex Advisors Managing Director noted that despite the turn of the calendar, market volatility is likely to persist. He observed that under RBI Governor Sanjay Malhotra, the central bank appears inclined to allow the rupee to move in line with market dynamics, while remaining vigilant to curb excessive volatility and ensure orderly market conditions.
CR Forex Advisors Managing Director further stated that progress on the currently stalled India–U.S. trade agreement represents a key upside risk and could significantly bolster market confidence if finalized. In the near term, the USD/INR pair is expected to trade within the range of 89.30 to 90.20, with a sustained break below 89.30 potentially paving the way toward the 88.50 level.
Meanwhile, the dollar index, which measures the U.S. currency’s strength against a basket of six major currencies, was up 0.09% at 98.32. Brent crude, the global oil benchmark, declined 0.78% to $60.85 per barrel in futures trade.
On the domestic equity front, benchmark indices traded higher, with the 30-share Sensex gaining 194.38 points to 85,414.98, while the Nifty advanced 47.55 points to 26,177.15. Separately, Foreign Institutional Investors (FIIs) were net sellers of equities worth ₹3,597.38 crore on Wednesday, as per exchange data.
According to forex market participants, the rupee enters 2026 amid a mix of headwinds and support factors. While global uncertainties remain elevated, India’s robust macroeconomic fundamentals and comfortable foreign exchange reserves are expected to provide a degree of resilience.
In the interbank foreign exchange market, the domestic currency opened at 89.94 against the U.S. dollar before slipping further to touch 89.99, marking an 11-paise decline from its previous close. In the final trading session of 2025 on Wednesday (December 31), the rupee had settled at 89.88 against the greenback.
Commenting on the outlook, CR Forex Advisors Managing Director noted that despite the turn of the calendar, market volatility is likely to persist. He observed that under RBI Governor Sanjay Malhotra, the central bank appears inclined to allow the rupee to move in line with market dynamics, while remaining vigilant to curb excessive volatility and ensure orderly market conditions.
CR Forex Advisors Managing Director further stated that progress on the currently stalled India–U.S. trade agreement represents a key upside risk and could significantly bolster market confidence if finalized. In the near term, the USD/INR pair is expected to trade within the range of 89.30 to 90.20, with a sustained break below 89.30 potentially paving the way toward the 88.50 level.
Meanwhile, the dollar index, which measures the U.S. currency’s strength against a basket of six major currencies, was up 0.09% at 98.32. Brent crude, the global oil benchmark, declined 0.78% to $60.85 per barrel in futures trade.
On the domestic equity front, benchmark indices traded higher, with the 30-share Sensex gaining 194.38 points to 85,414.98, while the Nifty advanced 47.55 points to 26,177.15. Separately, Foreign Institutional Investors (FIIs) were net sellers of equities worth ₹3,597.38 crore on Wednesday, as per exchange data.
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