Rupee falls 3 paise to 85.78 in early trade

Rupee weakens against US dollar due to strong American currency, market focus on Trump's policies, and record low closing.

The rupee depreciated 3 paise to 85.78 against the US dollar in early trade on Friday (January 3, 2024), weighed down by the strength of the American currency in the overseas market and a muted trend in domestic equities.

Forex traders said the US dollar gained against most currencies during 2024 and continued to remain on a strong footing this year.

Moreover, the market will keep its focus on Donald Trump's policies which could boost growth but could also increase price pressures and this would keep the US FED on a hold for longer on interest rate cuts.

At the interbank foreign exchange, the rupee opened at 85.77 then fell further to 85.78 against the American currency, registering a decline of 3 paise over its previous close.

On Thursday, the rupee depreciated 11 paise to close at a record low of 85.75 against the US dollar.

On December 27, the local currency touched its lifetime intraday low of 85.80 against the greenback.

"The Indian rupee opened weaker after a record closing on Thursday, as dollar demand continued unabated while the RBI sold USD 1 billion to prevent further weakening. As rupee remains overvalued vs its peers, it continues to weaken to new record lows daily," Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP said.