The Indian rupee weakened against the US dollar on Friday, December 26, 2025, extending its losses amid a combination of domestic and global pressures. The local currency closed the trading session 15 paise lower at 89.86 against the US dollar, compared to its previous close.
Key Factors Behind the Rupee's Decline
Forex market analysts pointed to several immediate triggers for the rupee's fall. A primary concern was a recovery in global crude oil prices, which raises India's import bill and puts pressure on the current account deficit. Simultaneously, there was significant dollar demand from domestic importers, creating a supply-demand mismatch in the currency market.
Adding to the negative sentiment was a broader risk-off mood among global investors. Uncertainties surrounding international trade deals and their potential impact on global growth made investors cautious, leading them to seek safer assets like the US dollar, which further weighed on emerging market currencies including the rupee.
Market Sentiment and Trader Perspectives
The trading environment was marked by caution. The confluence of rising oil costs and external trade tensions effectively dented investor confidence. Market participants noted that these factors overshadowed any potential positive domestic cues, leading to a steady outflow of capital from riskier assets.
Implications and Near-Term Outlook
The rupee's movement highlights its continued sensitivity to global commodity prices and financial sentiment. A sustained increase in crude oil prices remains a major headwind for the currency. Furthermore, the direction of the US dollar and the resolution of trade uncertainties will be critical factors to watch in the coming sessions. Traders and importers are likely to remain vigilant, adjusting their strategies based on these evolving macroeconomic indicators.
The performance of the rupee on December 26 underscores the ongoing challenges faced by emerging market economies in a volatile global financial landscape, where external factors can swiftly influence domestic currency valuations.
