INR/USD: Indian Rupee Slips to 85.73 Against US Dollar; Recovery in Asian Peers Limit Fall

On January 02, 2025, the Indian rupee traded at 85.73 to the U.S. dollar, up nearly 0.09% on the second trading day of the year against 85.65 at the previous close yesterday. The currency depreciated by 2.8% in 2024, marking its seventh consecutive year of decline.

Performance of Regional Currencies

Asian currencies recovered in today’s trade, offering some relief to the Indian rupee. This shift comes amid ongoing concerns hawkish Federal Reserve and expectations around Donald Trump’s potential second term as U.S. President.

The improved performance of regional currencies helped stabilise the rupee, which had been facing pressure against the US dollar in recent sessions.

Most regional currencies were weaker yesterday, as several markets were closed for the New Year holiday. The Dollar index cooled off today to 108.38 against 108.4 yesterday.

Focus on Fed’s Decision and Trump’s Inauguration

The US Federal Open Market Committee (FOMC) which decides on the US monetary policy will give its interest rate decision on January 29, 2025.

The expectation that the Fed will maintain higher interest rates for an extended period, along with anticipated policies from U.S. President-elect Donald Trump, has strengthened the dollar and U.S. bond yields.

But before that, Donald Trump will take charge as the US President in an iconic Inauguration event on January 20, with attention on how he addresses the pressing issues facing the nation and the world.

Brent Crude Rises, Foreign Investors Sell Indian Stocks

Brent crude futures are 0.4% up, at $75 per barrel as of January 2, 2025. Meanwhile, NSDL data revealed that foreign investors sold a net $625 million worth of Indian shares and Indian bonds valued at $55.2 million on December 31, 2024.

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