After opening flat, the Indian rupee fell to yet another record low of 90.46 versus the US dollar. The domestic currency was severely impacted by the uncertainty surrounding the finalization of the stalled trade agreement with the US, and persistent dollar outflows exacerbated the downward pressure. One of the worst-performing Asian currencies is the Indian Rupee, which has dropped more than 5% versus the US dollar.
When the US Federal Reserve announced a quarter-point rate drop on Wednesday, traders had anticipated some currency rebound. The dollar outflows, however, countered this. The rupee fell further after hitting a low of 90.37 during the afternoon session.
The currency broke its previous record low of 90.42 on December 4 and fell to 90.4675 versus the US dollar. According to a Reuters story, the RBI probably stepped in to assist stop the Indian rupee from suffering more losses. Additionally, it stated that the central bank’s assistance was minimal and primarily meant to reduce the decline rather than keep it at a particular level.
Analysts caution that the Indian rupee may potentially hit the 92-level vs the US dollar if the trade agreement is delayed.
The markets were highly optimistic that the rupee would enjoy a minor bounce and hover around the 88–89 levels as a result of the Fed lowering interest rates. Nevertheless, the native currency fell to yet another low in spite of the dollar index’s decline. The RBI’s $5 billion dollar-rupee buy/sell exchange, which is set to take place next week, will now be the main emphasis. This action will assist in supplying the local financial sector with liquidity.
