Due to declining risk appetite, dwindling hopes for a Federal Reserve rate decrease, and uncertainty around a US-India trade agreement, the Indian rupee fell to a record low against the dollar on Friday.
The rupee fell from its previous all-time low of 88.80, which was reached in late September and earlier this month, to 89.48. On the day, it was down 0.8%. Since the implementation of high US tariffs on Indian exports in late August, pressure on the rupee has continued. Given that foreign investors have already taken $16.5 billion out of Indian stocks, it is currently one of the worst major Asian performers this year.
The Reserve Bank of India, which has vigorously guarded the 88.80 level in recent sessions, reportedly dialed up its defense on Friday and most likely intervened near 89.50, according to traders.
This increased the strain on the rupee, which is already dealing with importers’ hedging interest and exporters’ dampened activity. For now, the new barrier (on USD/INR) is 89.50. The market has been short INR for a while, and the RBI appears to be giving in. However, a lot now hinges on the trade agreement. A favorable one can significantly lower the USD/INR ratio.
