Rupee Settles At 90.16, Down 26 Paise Against US Dollar Amid Global Pressures

2 min read Updated on 09 Jan 2026, 04:37 PM

Reviewed by

Radhika SScanX News Team

Overview

The Indian rupee declined 26 paise to close at 90.16 against the US dollar on Friday, pressured by rising crude oil prices, foreign fund outflows, and a stronger greenback. Despite opening higher at 89.88, the currency weakened throughout the session amid geopolitical tensions and domestic equity market declines. Foreign institutional investors sold equities worth ₹3,367.12 crores on Thursday, while the Sensex fell 604.72 points and Nifty dropped 193.55 points, reflecting broader market weakness.

*this image is generated using AI for illustrative purposes only.

The Indian rupee experienced significant weakness on Friday, declining by 26 paise to settle at 90.16 against the US dollar in provisional closing rates. The local currency faced headwinds from multiple global and domestic factors, including rising crude oil prices and continued foreign fund outflows amid heightened geopolitical tensions.

Trading Session Performance

The rupee's trading session reflected the challenging market conditions, with the currency showing initial strength before succumbing to broader pressures.

Parameter:	Value
Opening Rate:	89.88
Closing Rate:	90.16 (provisional)
Daily Change:	-26 paise
Previous Close:	89.90
Intraday Range:	89.88 - 90.25

According to Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, the rupee opened higher at 89.88 but weakened as domestic stock markets declined, falling to 90.25 during the session. The market awaited the US Supreme Court's decision on tariffs, which could potentially impact Indian stocks and the rupee in subsequent trading sessions.

Global Market Factors

Several international factors contributed to the rupee's decline, with commodity prices and dollar strength playing key roles in the currency's performance.

Global Indicator:	Performance
Dollar Index:	99.04 (+0.11%)
Brent Crude:	$62.34 per barrel (+0.56%)

The dollar index, measuring the greenback's strength against six major currencies, traded 0.11% higher at 99.04, adding pressure on emerging market currencies including the rupee. Simultaneously, Brent crude futures rose 0.56% to $62.34 per barrel, creating additional concerns for India's import-dependent economy.

Market Outlook and Analysis

Research analysts expect continued challenges for the rupee in the near term, with multiple factors likely to influence its trajectory. Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan, noted that the rupee is expected to trade with a negative bias due to geopolitical tensions leading to risk aversion in global markets. The combination of US dollar strength and surging crude oil prices may continue pressuring the local currency.

Foreign institutional investor outflows remain a significant concern, with FIIs offloading equities worth ₹3,367.12 crores on Thursday according to exchange data. However, analysts suggest that potential central bank intervention could provide support at lower levels.

Domestic Equity Market Impact

The currency weakness coincided with significant selling pressure in domestic equity markets, reflecting broader investor sentiment.

Market Index:	Closing Level	Daily Change
Sensex:	83,576.24	-604.72 points
Nifty:	25,683.30	-193.55 points

Traders are expected to monitor upcoming economic data, particularly the non-farm payrolls report from the US, for further direction. The USDINR spot price is anticipated to trade within a range of 89.90 to 90.60, according to market analysts.

UBS Forecasts Continued Rupee Pressure with Dollar-Rupee Target at 94

2 min read Updated on 09 Jan 2026, 04:26 PM

Reviewed by

Radhika SScanX News Team

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Overview

UBS forecasts the dollar-rupee rate at 94 for the coming year, citing weak capital flows at decade-low levels, widening current account gap, and recovering US dollar as key pressures on the Indian currency. While RBI intervention has prevented sharper declines and a potential trade deal could temporarily push the rupee to 88-89 range, underlying macro factors including limited FDI and weak capital inflows continue to weigh on the currency, with UBS viewing any trade deal support as temporary.

*this image is generated using AI for illustrative purposes only.

UBS Global Research expects the Indian rupee to face continued pressure in the coming year, with the investment bank setting a dollar-rupee target of 94 amid multiple headwinds affecting the currency.

Key Factors Weighing on Rupee

Rohit Arora, Head of Asia FX and Rates Strategy at UBS Global Research, identified several factors contributing to the rupee's challenges. The currency has underperformed its peers due to weak domestic demand, tariff-related concerns, and foreign exchange reserve accumulation by the Reserve Bank of India. Capital flows are currently running at their lowest levels in over a decade, making them a key driver of rupee movement.

Challenge:	Impact
Capital Flows:	Running at decade-low levels
Current Account:	Widening gap
FDI Flows:	Limited inflows
US Dollar:	Expected gradual recovery

Arora noted that strong intervention by the RBI has prevented a sharper fall in the currency. The central bank's active management approach has helped cushion the rupee's decline, though underlying pressures persist.

UBS Outlook and Scenarios

The investment bank has pegged the dollar-rupee rate at 94 for the coming year, based on expectations of a gradually recovering US dollar. Arora explained that the rupee has "missed that window of broad dollar decline," with UBS expecting dollar strength to return from the current quarter.

While a potential trade deal could provide near-term support for the rupee, UBS views such support as likely temporary and insufficient to change the broader downward trend. In a scenario where a trade deal materializes unexpectedly, the rupee could rebound to the 88-89 range, though gains beyond that level may be limited.

Scenario:	Dollar-Rupee Level
Baseline Forecast:	94.00
Best Case (Trade Deal):	88-89 range
Weak Scenario:	Beyond 95.00

RBI's Approach and Currency Management

The RBI has indicated comfort with a 3-4% annual depreciation, particularly given the current environment of low inflation and uneven growth recovery. Arora noted that the rupee is being used as a "shock absorber," especially if tariff pressures persist. Low inflation provides policymakers room to allow currency flexibility without significant spillover effects into equity markets.

Large foreign exchange forward maturities and the central bank's active currency management are expected to cap any potential appreciation. The "historical trend of higher highs and higher lows" in the dollar-rupee trajectory since 2019 is likely to remain intact, according to UBS.

Comparative Currency Positioning

Arora cautioned against viewing the rupee as undervalued despite its recent decline, noting that on an inflation-adjusted basis, the currency remains relatively elevated compared with the Chinese renminbi. UBS maintains a more positive outlook on the Chinese renminbi, citing better external balances and support from Chinese equities.

Looking ahead to 2026, UBS expects the rupee may not experience the same degree of underperformance as in the current year but could still lag some regional peers. The investment bank's analysis suggests that while the worst of the rupee's decline may be behind it, significant recovery remains unlikely without substantial improvements in underlying fundamentals.