The Indian Rupee weakened further on Wednesday, December 10, 2025, continuing its recent downward trend against the US dollar. The rupee depreciated by 17 paise, reaching 90.11 against the US dollar. This decline reflects a combination of global and domestic economic factors.
Several factors contributed to the rupee's weakness. One significant factor is the persistent demand for dollars from importers. This demand puts pressure on the rupee, as more rupees are needed to purchase the same amount of dollars. Additionally, concerns regarding tariffs and the anticipation of the US Federal Reserve's policy decisions have also played a role. Investors are adopting a cautious approach, awaiting clarity from the Federal Reserve before making definitive investment decisions.
The market is closely watching the ongoing trade talks between the United States and India, which commenced on December 10. The outcome of these discussions could potentially provide some positive momentum for the rupee in the coming days. Commerce and Industry Minister Piyush Goyal has stated that the trade talks are progressing, and both nations are striving towards a bilateral trade agreement. A delegation led by Deputy U.S. Trade Representative Rick Switzer is currently in discussions with Indian counterparts, seeking to advance negotiations.
However, the lack of a concrete trade deal thus far has weighed on the rupee. The absence of a trade agreement has impacted trade and portfolio flows into Indian equities, making the currency more reliant on interventions from the central bank for support. Foreign investors have withdrawn over $16 billion from Indian equities this year.
Concerns about foreign fund outflows and negative trends in domestic equity markets are also contributing to the rupee's depreciation. Anuj Choudhary, a Research Analyst at Mirae Asset ShareKhan, anticipates that the rupee will likely maintain a negative bias due to weak domestic markets and continued foreign institutional investor (FII) outflows. He also suggested that delays in a trade deal between the U.S. and India could further negatively impact the rupee.
Despite these pressures, some analysts predict a potential strengthening of the rupee in the long term. Bank of America Global Research projects that the Indian rupee could appreciate to 86 per US dollar by 2026. This projection is based on the expectation of a weakening US dollar and the belief that the rupee's recent depreciation reflects temporary distortions rather than fundamental weaknesses.
Furthermore, a decline in crude oil prices and a weaker US dollar may offer some support to the rupee at lower levels. The USDINR spot price is expected to fluctuate within a range of 89.70 to 90.30.
In conclusion, the rupee's current weakness is attributable to a confluence of factors, including importer demand, tariff concerns, anticipation of US Federal Reserve policy, and foreign fund outflows. The market's focus remains on the US-India trade talks, which could provide potential relief. While short-term pressures persist, some analysts remain optimistic about the rupee's potential to recover in the coming years.
