As the dollar is expected to strengthen in the upcoming months due to Donald Trump’s election, the rupee fell to a record low on Thursday. The rupee fell to 84.2950, inching past the previous all-time low of 84.28, which was reached on Wednesday.
Analysts predicted that the fear of tariffs would weaken the euro and Asian currencies, while Trump’s tax cuts and deregulation measures would boost the U.S. economy and make investors favor the dollar over other currencies.
Following a 1.8% decline the day before, Asian currencies took a break on Thursday. The dollar index fell to 104.9, down 0.1%.
The rupee’s low implied volatility compared to its regional rivals indicates that traders anticipate the Reserve Bank of India will continue to intervene to prevent abrupt fluctuations in the currency’s value.
The currency is also under pressure from ongoing withdrawals from Indian stocks. In addition to the $11 billion in outflows in November, foreign investors have sold almost $1.5 billion worth of stocks so far this month.
Investors are currently awaiting the policy announcement from the U.S. Federal Reserve, which is expected around midnight IST. Investors will be watching Chair Powell’s remarks for clues about the future direction of benchmark interest rates, and it is generally anticipated that the Fed will lower rates by 25 basis points.
