The Indian rupee extended its losses against the US dollar on Monday, closing weaker as concerns over the country's external trade dynamics weighed on market sentiment.
Rupee Closes at a Lower Level
In the forex trading session on December 1, 2025, the domestic currency declined by 8 paise to settle at 89.53 against the American dollar. This movement continues a trend of sustained pressure on the rupee observed in recent sessions.
Key Factors Behind the Depreciation
Forex market experts pointed to a combination of structural and policy-related factors driving the rupee's weakness. The primary reasons highlighted include:
- A Widening Trade Deficit: India's import bill continuing to outpace exports has created a persistent demand for dollars, putting downward pressure on the rupee's value.
- The Delayed India-US Trade Deal: The lack of a finalized trade agreement between the two major economies has introduced an element of uncertainty, affecting investor confidence and capital flows.
- Limited Central Bank Intervention: The Reserve Bank of India (RBI) has reportedly been measured in its actions to defend the currency, allowing market forces to play a more significant role in determining the exchange rate.
Market Implications and Outlook
The rupee's movement reflects broader global and domestic economic currents. A weaker currency has mixed implications; it can make imports more expensive, potentially fueling inflation, but can also boost the competitiveness of Indian exports. Traders will be closely monitoring the RBI's future stance in the forex market, progress on international trade negotiations, and monthly trade data for further cues on the rupee's trajectory. The day's closing figure underscores the ongoing challenges in maintaining currency stability amid complex global trade dynamics.
