Indian rupee bias tilts higher on final day of year on supportive Asia FX, momentum

MUMBAI: The Indian rupee was biased higher on the final trading day of the year, due to supportive moves in Asian currencies and favourable near-term momentum.

The 1-month non-deliverable forward indicated the rupee will open marginally higher versus the U.S. dollar, having advanced 0.2% on Tuesday to settle at 89.79.

Trading volumes are expected to be thin on the final day of the year, with moves in the Chinese yuan and the Reserve Bank of India’s likely defence of the 90 level the main talking points, a currency trader at a bank said.

He added that Tuesday’s move in the rupee, while small, was constructive and tilted the bias modestly to the upside heading into the New Year.

“With the yuan climbing and holding past 7 (to the U.S. dollar), and the RBI seemingly uncomfortable with allowing the rupee to weaken much beyond current levels, the setup finally looks a bit more supportive (for the rupee),” the trader said.

The offshore yuan inched up in Asian trade to 6.9850 per dollar, hovering near its highest since September 2024. The currency has rallied nearly 5% against the dollar this year and about 10% versus the rupee.

Analysts say the yuan’s rally reflect a weaker dollar, policy comfort with appreciation and improving sentiment toward Chinese assets. The rupee, in contrast, has won little relief despite the dollar softness, constrained by high U.S. tariffs and lacklustre flows. The dollar index has fallen 9.5% in 2025.

Meanwhile, according to minutes of the latest two-day session from the Federal Reserve at its December 9-10 meeting, the central bank agreed to reduce rates only after a deeply nuanced debate about the risks facing the U.S. economy right now.