The weakening of the Indian rupee against the US dollar, hitting a record low of 85.6450, has raised concerns among traders and economists. The importer demand for the greenback, coupled with the strength of the USD, has contributed to the depreciation of the rupee.
Analysts predict that the volatility in the forex market is likely to increase as attention shifts to key economic data and the re-inauguration of Donald Trump as the US President on January 20. Trump’s proposed steep tariffs on various countries could further impact the rupee’s performance.
Despite these challenges, experts like Amit Pabari of CR Forex Advisors remain optimistic about the Indian economy. Pabari believes that the rupee will face temporary pressure but is expected to trade within a range of 85.20 to 85.80. Factors such as a strong Kharif harvest and favorable Rabi sowing are expected to ease inflation, providing relief to the economy.
Jahnavi Prabhakar, an economist at Bank of Baroda, acknowledges the likelihood of a marginal depreciation of the rupee due to volatility in foreign portfolio investor (FPI) flows and the strengthening of the dollar.
Overall, the outlook for the rupee in 2025 is mixed, with a range of factors influencing its performance. As the year progresses, it will be crucial to monitor global economic developments and their impact on the Indian currency.
