The week ended on a poor note for the rupee with the currency settling at a new record low of 85.77 against the dollar amid global strength of the greenback and a weaker Chinese yuan.

The stock markets also disappointed on Friday: the benchmark Sensex crashed more than 720 points because of selling pressure in IT and banking stocks.

At the inter-bank forex markets, the rupee opened at 85.76 against the previous close of 85.75 and fell to an intra-day low of 85.80.

However, it recovered from these levels because of the suspected intervention from the Reserve Bank of India (RBI) and later closed at 85.77.

Analysts were not surprised by the rupee’s fall as the overseas dollar continued to advance with the dollar index (DXY, which gauges its strength against six currencies) crossing the 109 mark.

The rupee was also pressured by firm crude oil prices. Benchmark Brent crude was trading at $76.19 a barrel against its last finish of $75.93.

Moreover, a weak yuan also weighed on the rupee. The Chinese currency reportedly breached the psychological level of 7.3 to the dollar for the first time since late 2023. The onshore currency later closed at 7.3093, a drop of 0.14 per cent.

After Donald Trump was elected as the President of the US, the dollar has been gaining consistently because of fears he would take protectionist measures, which will lift inflation and restrain the US Fed from cutting rates.

Forex circles said the rupee is poised to touch the 86 mark against the dollar though much will depend on the RBI which will want an orderly movement of the unit.

“We expect the rupee to trade with a negative bias on a strong US dollar and demand for dollar from importers. FII outflows may also put pressure on the rupee. However, any further intervention by the RBI may support rupee at lower levels. The USDINR spot price is expected to trade in a range of 85.60-86,’’ Anuj Choudhary, research analyst at Mirae Asset Sharekhan, said.

“With limited movement observed, the rupee remained under pressure amid subdued market activity and ongoing global headwinds. The trading range is expected to stay between 85.60 and 86.00 in the near term, as participants monitor international developments and market trends,’’ Jateen Trivedi, VP research analyst — commodity and currency, LKP Securities said.

At the bourses, investors preferred to lighten their positions in some of the counters ahead of the results season which commences next week.

Analysts added that market participants were also seen booking profits at higher levels after the recent rally even as the falling rupee also weighed on the sentiment.

Tata Consultancy Services will be the first amongthe frontliners which willdeclare its numbers for the third quarter ended December 31, 2024 on January 9. Thiswill be followed by HCL Technologies on January 13and Infosys on January 16.

“A sell-on-rally sentiment prevails in the market due to a strong US dollar, high valuation and a shift towards a multi-asset investment strategy. Reducing US jobless claims and potential policy shifts in the US indicate that the Fed is not in a hurry to reduce interest rates in the near term’’, Vinod Nair, head of research, Geojit Financial Services said.

While the 30-share sensex began on a positive note at 80072.99, it could not sustain the gains and tanked 833.98 points to hit a day’s low of 79109.73.

Subsequently, the index settled with a loss of 720.60 points at 79223.11. The NSE Nifty plummeted 183.90 points to 24004.75.