The Indian rupee has started the year 2026 on a downturn, sliding 11 paise to reach 89.99 against the US dollar during early trading on Thursday. This depreciation is attributed to ongoing foreign fund outflows that have put pressure on the currency.
In the interbank foreign exchange market, the rupee initially opened at 89.94 before losing ground and ultimately touching 89.99. This marks a decline from its previous close of 89.88 recorded on the last trading day of 2025.
Forex analysts have indicated that while the change of the calendar year brings new challenges, the rupee benefits from strong macroeconomic fundamentals and substantial foreign exchange reserves, which could provide some level of stability. Amit Pabari, Managing Director of CR Forex Advisors, noted that volatility is likely to continue, but the Reserve Bank of India (RBI), under the leadership of Sanjay Malhotra, seems willing to let the rupee respond to market dynamics while also being prepared to intervene to prevent excessive fluctuations.
According to Pabari, the future of the USD/INR exchange rate is projected to oscillate within a range of 89.30 to 90.20 in the near term. A persistent drop below 89.30 could pave the way for a further decline towards 88.50.
Moreover, the dollar index, which reflects the value of the US dollar against a basket of six major currencies, was noted to be 0.09 percent higher at 98.32. In terms of commodities, Brent crude oil futures were down by 0.78 percent, trading at USD 60.85 per barrel.
On the domestic equity markets, the 30-share benchmark index, Sensex, was up by 194.38 points at 85,414.98, while the Nifty index gained 47.55 points to reach 26,177.15. This positive movement in the equity market comes despite the fact that foreign institutional investors had sold off equities worth Rs 3,597.38 crore on Wednesday, as per exchange data.
The ongoing discussions regarding the stalled India-US trade deal remain a significant factor that could enhance market confidence if progress is made. For now, traders will keep a close watch on the evolving dynamics as the new year unfolds.
