Indian Rupee Shows New Vigour at the Start of the New Year, Delivers a Strong Blow to the US Dollar

The rupee opened at 89.95 against the dollar in the interbank foreign exchange market and strengthened to 89.92 during trading, representing a gain of six paise from the previous close.

Rupee vs Dollar: The Indian rupee has shown strength at the start of the new year. On Friday, January 2, 2026, the last trading day of the week, the rupee gained six paise against the US dollar in early trading, reaching 89.92. According to foreign exchange traders, the rupee is likely to trade in a narrow range as the Reserve Bank of India (RBI) is actively intervening to defend the 90 level. A positive sentiment in the domestic stock markets supported the rupee, although continuous outflows of foreign capital somewhat limited this strength.

Rupee Strengthens

The rupee opened at 89.95 against the dollar in the interbank foreign exchange market and strengthened to 89.92 during trading, representing a gain of six paise from the previous close. Earlier on Thursday, the rupee had closed at 89.98 against the dollar. Meanwhile, the dollar index, which reflects the dollar's position against six major currencies, fell by 0.15 percent to 98.17, providing some relief to emerging market currencies.

In the stock market, there was a positive sentiment in the domestic markets. The Sensex rose by 158.19 points to 85,346.79 in early trading, while the Nifty traded at 26,202.35, a gain of 55.8 points. In the international market, Brent crude fell by 0.38 percent to $61.08 per barrel. However, foreign institutional investors (FIIs) continued their selling spree, selling shares worth a net of Rs 3,268.60 crore on Thursday, which put pressure on the rupee and the market rally. GST Collections Increase

Meanwhile, according to government data, gross Goods and Services Tax (GST) collections in December rose by 6.1 percent to over ₹1.74 lakh crore. However, the pace of GST collection appeared somewhat subdued due to relatively slower growth in revenue from domestic sales after tax cuts.

Gross GST collections in December 2024 were recorded at over ₹1.64 lakh crore. The figures indicate that consumption remains stable, but the reduction in tax rates and limited momentum in domestic demand are putting pressure on revenue growth.