The Indian rupee appreciated by 20 paise to reach 89.69 against the US dollar in early trading on Friday, ahead of the Reserve Bank of India’s (RBI) monetary policy announcement.
Forex traders indicated that investors are exercising caution in light of the RBI’s decision, suggesting that a neutral stance might not significantly impact the markets. However, any indication of a rate cut could exert additional pressure on the already vulnerable rupee, they warned.
Factors such as selling pressure from foreign investors, rising crude oil prices, and delays in the announcement of the India-US trade agreement have also contributed to the rupee’s weakening. At the interbank foreign exchange market, the rupee began trading at 89.85 against the dollar before gaining ground to touch 89.69, reflecting a 20 paise appreciation from its previous close.
On Thursday, the rupee had recovered from its record low, gaining 26 paise to close at 89.89 against the greenback. RBI Governor Sanjay Malhotra is set to announce the bi-monthly policy amid mixed expectations, including a possible 25-basis-point rate cut or maintaining the current stance.
The RBI’s rate-setting panel, the Monetary Policy Committee (MPC), commenced a three-day meeting on its upcoming bi-monthly monetary policy on Wednesday, against a backdrop of declining inflation, rising GDP growth, a depreciating rupee that crossed the 90 mark against the dollar, and ongoing geopolitical tensions.
Amit Pabari, Managing Director of CR Forex Advisors, stated, “This morning, all eyes are on the RBI’s Monetary Policy Committee meeting. A rate cut, or even a hint of a possible cut in the future, given India’s ultra-low inflation, could weigh further on the rupee.” Pabari added that the markets are not solely focused on interest rates but are particularly interested in the RBI’s perspective on the recent decline of the currency.
Meanwhile, the dollar index, reflecting the greenback’s strength against a basket of six currencies, was trading 0.05% higher at 90.03. Brent crude, the global oil benchmark, saw a 0.21% decline to $63.12 per barrel in futures trading.
On the domestic equity market front, the Sensex rose by 53.54 points to reach 85,318.86 in early trade, while the Nifty increased by 28.2 points to 26,061.95. Foreign institutional investors sold shares worth ₹1,944.19 crore on a net basis on Thursday, according to exchange data.
In a related note, Fitch Ratings raised India’s GDP growth forecast for the current fiscal year to 7.4%, up from 6.9%, driven by increased consumer spending and improved sentiment due to GST reforms. The firm noted that the declining inflation provides the RBI room for one more policy rate cut in December to 5.25%, following 100 basis points of cuts so far in 2025.
Published on December 5, 2025.
