Indian rupee drops for second straight month but RBI support curbs losses

MUMBAI: The Indian rupee closed out the year with a second straight monthly decline in December, a period in which it fell past the 91-per-dollar mark for the first time, before intervention by the Reserve Bank of India helped spark a recovery.

The Indian rupee settled at 89.87 against the U.S. dollar on Wednesday, down 0.1% on the day, taking its losses for the month to 0.5%. The currency dropped 4.7% over 2025, its biggest annual decline in three years.

The factors that weighed on the rupee for much of the year remained in place in December, including foreign selling of Indian equities, an increase in importer hedging and the absence of a trade deal with the U.S.

“Consistent outflows by foreign investors… and dollar demand from defence, oil and gold are all impacting the rupee,” said Anil Bhansali, head of treasury at Finrex Treasury Advisors.

The Indian rupee slid to an all-time low of 91.0750 per dollar earlier this month before staging a recovery, largely on the back of RBI intervention.

After the rupee slipped past the 91-per-dollar mark, the RBI intervened aggressively on two separate occasions, bankers said, to rein in speculative dollar positions and temper a surge in hedging demand from importers.

The central bank’s dollar sales helped arrest the Indian rupee’s decline and signalled its discomfort with one-way moves.

The intervention echoed the RBI’s actions in October and November, when it stepped in aggressively to disrupt persistent, one-directional pressure on the rupee.