The rupee depreciated 10 paise to close at 89.98 against the US dollar on Thursday, the first trading session of 2026, as sustained foreign fund outflows and a negative trend in domestic equities dented investor sentiments.
Forex traders said the USD/INR pair traded in a tight range, as support from easing crude oil prices was offset by a positive tone in the US dollar index and foreign fund outflows.
The Indian rupee declined on the first day of the year, after registering a 5% slump in 2025, as significant fund outflows kept dollar demand elevated and the rupee under pressure.
1 January 2026
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At the interbank foreign exchange, the local unit opened at 89.94 against the dollar, touched an intra-day low of 89.99, and a high of 89.93.
At the end of Thursday's trading session, the rupee was quoted at 89.98 against the greenback, down 10 paise from its previous close.
On Wednesday, the rupee depreciated by 13 paise to close at 89.88 against the US dollar.
In 2025, the rupee slumped 5% amid persistent outflows of foreign capital and heightened dollar demand from importers, making it one of the worst-performing Asian currencies.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.09% higher at 98.32.
Brent crude, the global oil benchmark, was trading 0.78% higher at $60.85 per barrel in futures trade.
Forex traders said the USD/INR pair is trading under pressure due to multiple factors, including a shift toward risk aversion, driven by persistent capital withdrawals from foreign investors ahead of the holiday break, alongside heightened greenback demand from importers.
Dilip Parmar - Senior Research Analyst, HDFC Securities, said, "The Indian rupee weakened against the US dollar as lack of major catalysts left the market searching for direction. Thin liquidity, driven by restricted supply and persistent demand, put upward pressure on the pair as major forex markets observed New Year Holiday today." Looking ahead, Parmar said the USD-INR is expected to trade "within a near-term range, finding support at 89.40 and resistance at 90.26".
On the domestic equity market front, the stock market ended the first trading session of 2026 on a flat note. Sensex dipped 32 points to 85,188.60, while the Nifty was up 16.95 points to 26,146.55.
Foreign Institutional Investors offloaded equities worth ₹3,268.60 crore on Thursday, according to exchange data.
On the domestic macroeconomic front, gross GST collections rose 6.1% to over Rs 1.74 lakh crore in December 2025, on slow growth in revenues from domestic sales following the sweeping tax cuts, according to government data released on Thursday.
Gross Goods and Services Tax (GST) revenue in December 2024 was over ₹1.64 lakh crore.
