Rupee sees high volatility against U.S. dollar in early trade

The rupee witnessed higher volatility in early trade on Wednesday (December 17, 2025) as uncertainty over the India-US trade deal and persistent foreign fund outflows led to subdued crude oil prices lost support.

Forex traders said the rupee’s weakness in December was mainly due to continued selling by foreign portfolio investors (FPIs) in both equity and debt markets. Foreign investors repeatedly sold several billion dollars of Indian assets on a daily basis over the past few months, with the selling accelerating in the past two months.

However, with Brent crude oil prices hovering near recent multi-year lows of $59 per barrel, the local unit found support at lower levels.

At the interbank foreign exchange market, the rupee opened at 91.05 against the US dollar, 12 paise lower than its previous close.

However, the domestic unit witnessed a sharp correction and rose 97 paise to touch an early high of 89.96 against the American currency and was trading at 90.18 against the US dollar at 9:46 am.

On Tuesday (December 16), the rupee fell below 91 per dollar to reach a low of 91.14. Ultimately it closed at 90.93 against the US currency.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.17% higher at 98.31.

Brent crude, the global oil benchmark, was trading at $59.54 a barrel in futures trade as record non-OPEC (Organization of the Petroleum Exporting Countries) supply, weak China data and optimism over the Ukraine ceasefire were the main reasons for the current decline, traders said.

Meanwhile, Minister of State for Finance Pankaj Chaudhary informed Parliament on Tuesday (December 16) that, “During the current financial year, the Indian rupee has been impacted by the widening trade deficit amid relatively weak support from the capital account and the potential upside arising from the ongoing developments in India’s trade agreement with the US.”

“Currency depreciation is likely to increase export competitiveness, which in turn has a positive impact on the economy. On the other hand, depreciation may increase prices of imported commodities. However, the overall impact of exchange rate depreciation on domestic prices depends on the extent of pass-through of international commodity prices to the domestic market,” he said.

On the domestic equity market front, the 30-share benchmark index Sensex was trading 146.09 points higher at 84,825.95, while the Nifty was up 62.05 points at 25,922.15.

According to exchange data, foreign institutional investors (FIIs) sold equities worth ₹2,381.92 crore on Tuesday (December 16).

According to Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP, the rupee may fall to 92 at a slow and steady pace in the coming days, with no signs of any trade deal between India and the US, which is also a reason for the fall in equities.