MUMBAI, Dec 31 (Reuters) – The Indian rupee weakened slightly on Tuesday, tracking modest declines in other Asian peers, while volumes were relatively muted on the last trading day of 2024.
The rupee was at 85.59 against the U.S. dollar as of 09:45 a.m. IST, down from its close at 85.5350 in the previous session.
The dollar index was little changed near the 108 handle. Most Asian currencies dipped slightly, with the Thai baht down nearly 0.7% and leading losses.
Dollar bids “are pretty broad based but volumes are expectedly shallower than usual,” a trader at a mid-sized private bank said.
“We will also have to watch for any signs of activity from the Reserve Bank of India (RBI) towards the end of the session in case the central bank helps the rupee end the year stronger than 85.50,” the trader said.
The rupee is down over 1% so far in December and is set to log its worst monthly performance in two years.
Converging global and domestic headwinds have hurt the currency this month.
Globally, a hawkish shift in the Federal Reserve’s policy outlook combined with expectations over incoming U.S. President Donald Trump’s policies have boosted the dollar and U.S. bond yields.
The dollar index is up over 2% this month, while the 10-year U.S. Treasury yield has climbed more than 35 basis points.
Concurrently, concerns about India’s slowing economic growth and a widening trade deficit have added to pressure on the rupee, while capital flows have also been tepid.
“In the short term, the rupee is likely to remain under pressure,” said Amit Pabari, managing director at FX advisory firm CR Forex, pegging the currency in a 85.20-85.80 range. (Reporting by Jaspreet Kalra; Editing by Sonia Cheema)
