The Indian rupee hit an all-time low on Thursday, falling to 84.2950, surpassing the previous record of 84.28 reached on Wednesday. This decline comes amid expectations that Donald Trump’s victory could strengthen the dollar in the coming months.
Analysts suggest that Trump’s policies, including tax cuts and deregulation, may boost US economic growth, making the dollar more attractive compared to other currencies. The threat of tariffs could further weaken the euro and other Asian currencies.
On Thursday, Asian currencies paused after a sharp 1.8% drop the day before. The dollar index edged down 0.1% to 104.9.
Traders anticipate that the Reserve Bank of India (RBI) will continue its interventions to curb sharp fluctuations in the rupee, as seen in its relatively low implied volatility compared to regional peers. A state-run bank trader stated that while the RBI is allowing the rupee to rise slowly, the upside could be limited to around 84.40 in the near term.
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Continued foreign outflows from Indian stocks have added pressure on the rupee. Foreign investors have sold over $1.5 billion in Indian equities so far in November, following $11 billion in outflows the previous month.
Indian equity indices, including the BSE Sensex and Nifty 50, were down around 0.5% each on the day.
Citibank analysts pointed out that the RBI’s interventions and India’s inflation rate compared to global figures will play a key role in determining the rupee’s future direction.
Investors are now focusing on the upcoming US Federal Reserve policy decision, with the Fed widely expected to reduce rates by 25 basis points. Market participants will be watching closely for Chairman Powell’s remarks on the future trajectory of interest rates.