The rupee fell 5% in 2025 as persistent capital outflow from foreign investors along with rising dollar demand from importers made it one of the worst performing Asian currencies.
In the last trading session of 2025, the rupee fell 13 paise to close at 89.88 (provisional) against the US dollar as month-end demand and dollar buying by FPIs kept it lower.
Forex traders said the domestic currency has displayed a negative bias throughout the year, making it Asia’s worst-performing currency in 2025. Foreign portfolio investors have pulled out $16.5 billion from equities this year, further hurting investor sentiment.
At the interbank forex, the local unit opened at 89.89 against the dollar and touched an intra-day low of 89.95 and high of 89.84 against the American currency.
At the end of the trading session on Wednesday (December 31, 2025), the rupee was quoted at 89.88 (provisional) against the greenback, showing a decline of 13 paise over its previous close.
On Tuesday (December 30), the rupee increased by 23 paise to close at 89.75 against the dollar.
The rupee has fallen 4.95% on a year-to-date basis. On December 31, 2024, it was quoted at 85.64.
Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP, said, “Since the Trump administration took office, the rupee has been the worst performing currency in the Asian region, declining by more than 5% during 2025, its steepest decline in the last three years.”
Meanwhile, the Reserve Bank in its Financial Stability Report (FSR) on Wednesday (December 31) said the rupee depreciated against the US dollar, reflecting deteriorating terms of trade due to the impact of tariffs and a slowdown in capital flows.
The report further said that despite the uncertain and challenging global economic backdrop, the Indian economy is likely to maintain strong growth underpinned by strong domestic demand, benign inflation and prudent macroeconomic policies.
“The domestic financial system remains strong and resilient, supported by strong balance sheets, easy financing conditions and low financial market volatility. Nevertheless, there are near-term risks from external uncertainties – geopolitical and trade-related.”
Mr Bhansali further said that “Continued withdrawals by FPIs and stake selling by investors in defence, oil and gold demand impacted the rupee as it fell to as low as 91.08 before controlling it and bringing it to the current level”.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.10% higher at 98.33.
Global oil benchmark Brent crude was trading 0.13% higher at $61.41 a barrel in futures trade.
Forex traders said the USD/INR pair is trading under pressure due to several factors, including a shift towards risk aversion, continued capital outflows by foreign investors ahead of the holidays as well as rising greenback demand from importers.
On the domestic equity market front, the benchmark-sensitive Indices 2025 ended higher, with Sensex jumping 545.52 points to close at 85,220.60, while Nifty rose 190.75 points to 26,129.60.
According to exchange data, foreign institutional investors sold equities worth ₹3,844.02 crore on Tuesday (December 30).
published – December 31, 2025 05:04 PM IST