The Indian rupee extended its losing streak for the third consecutive session, falling 10 paise to 90.44 against the US dollar in early Friday trading. The currency faced headwinds from continued foreign fund outflows and a robust US dollar, though forex traders noted that lower crude oil prices and favorable equity market conditions helped prevent a sharper decline.

Currency Performance Details

The rupee's trading session showed initial weakness from the opening bell. The currency commenced trading at 90.37 against the US dollar at the interbank foreign exchange market before sliding to 90.44, representing a 10 paise decline from the previous session's closing level.

The currency's recent performance reflects a consistent downward trend, with the rupee losing 11 paise on Wednesday to close at 90.34, following an earlier decline of 6 paise in the preceding session. Foreign exchange markets remained closed on Thursday due to a holiday for Mumbai municipal corporation elections.

Market Factors and Global Context

The dollar index, which measures the US dollar's strength against a basket of six major currencies, declined marginally by 0.02% to 99.10. Despite this slight weakening, the dollar maintained its overall strength, contributing to pressure on emerging market currencies including the rupee.

Analysts highlighted that December US inflation data significantly impacted dollar valuations and reduced market expectations for immediate interest rate cuts by the Federal Reserve. This development has strengthened the dollar's appeal among investors seeking higher yields.

Trade Deficit Impact

India's trade deficit figures released on Thursday added to the rupee's challenges. The country's trade deficit widened to $25.04 billion in December 2025, compared to $24.53 billion in November and $22.00 billion in December 2024.

The expanding trade deficit reflects increased import costs relative to export earnings, putting additional strain on the rupee as demand for foreign currency rises to meet import obligations.

Supporting Factors

Despite the overall negative sentiment, certain factors provided some cushion to the rupee's decline. Lower crude oil prices offered relief, as India imports a significant portion of its energy requirements, making the country sensitive to oil price fluctuations. Additionally, positive sentiment in domestic equity markets helped maintain some investor confidence, preventing a more severe currency depreciation.

The Indian rupee continued its weakening streak for the third consecutive session, declining 10 paise to 90.44 against the US dollar in early Friday trading. The domestic currency faced headwinds from persistent foreign fund outflows and a firm greenback, though supportive factors prevented a steeper decline.

Currency Performance and Market Dynamics

At the interbank foreign exchange market, the rupee opened at 90.37 before slipping further to 90.44 against the dollar. This represented a 10 paise decline from the previous session's closing level, extending the currency's recent weakness.

The foreign exchange markets remained closed on Thursday due to a holiday for Mumbai municipal corporation elections, contributing to the trading gap.

Global Currency and Commodity Trends

The dollar index, which measures the greenback's strength against a basket of six currencies, was trading 0.02 per cent lower at 99.10. Despite this marginal decline, the American currency maintained its overall strength following December US inflation data that reduced market expectations for immediate interest rate cuts by the Federal Reserve.

Brent crude, the global oil benchmark, provided some relief by trading 0.34 per cent lower at USD 63.54 per barrel in futures trade. Lower crude oil prices typically benefit India as a major oil importer, helping to reduce import costs and supporting the rupee.

Trade Deficit Impact

India's trade deficit data released on Thursday showed a widening gap to USD 25.04 billion in December 2025, compared to USD 24.53 billion in November and USD 22 billion in December 2024. This deterioration in the trade balance added pressure on the rupee by indicating higher import costs relative to export earnings.

Equity Market Performance

Domestic equity markets provided positive sentiment, with the Sensex climbing 210.04 points to 83,592.75 and the Nifty rising 34.65 points to 25,700.25. However, foreign institutional investors continued their selling spree, offloading equities worth ₹4,781.24 crore on Wednesday according to exchange data.

Market Outlook

Forex traders noted that while the rupee faced multiple headwinds including foreign fund outflows and a strong dollar, the combination of lower crude oil prices and positive domestic equity market sentiment helped prevent a more significant decline. The currency's performance continues to be influenced by global monetary policy expectations and domestic economic indicators.