The Indian rupee weakened against the US dollar on Friday, December 5, 2025, following the Reserve Bank of India's latest monetary policy announcement. The domestic currency closed at 90.05 against the greenback, marking a decline of 16 paise from its previous close.
Immediate Market Reaction to RBI Decision
Forex market traders attributed the rupee's fall directly to the central bank's policy stance. The Reserve Bank of India's decision, which included a key rate adjustment, created an environment of dollar demand, putting downward pressure on the local currency. The trading session saw the rupee navigating a volatile path before settling at the 90.05 level.
Analysts Point to Foreign Investor Flows
Market experts highlighted a crucial factor for the rupee's future trajectory. Forex traders stated that the RBI's rate cut is likely to push the rupee even lower in the near term. They clarified that this trend may persist until there is a substantial and sustained return of foreign portfolio investors (FPIs) to Indian markets. The absence of strong FPI inflows removes a key support pillar for the currency.
Outlook and Key Factors to Watch
The short-term outlook for the rupee remains cautious. Analysts will be closely monitoring global dollar strength, crude oil price movements, and domestic equity market performance. The return of foreign institutional investment in a "big way," as cited by traders, is now seen as a critical trigger for any meaningful reversal in the rupee's current weakness. The market's focus has shifted to incoming economic data and global cues for further direction.
