The rupee fell sharply to 84.70 per US dollar on Monday, breaking the previous record of 84.5075. Concerns about India’s economic slowdown and a strong dollar led to a decline in the value. At 9:45 am IST, the rupee was trading at 84.6025, down 0.1 percent. It is reported that the Reserve Bank of India (RBI) intervened, and government banks sold dollars to stop the situation.
Weak GDP data and exports weighed on the rupee
India’s GDP growth fell to a seven-quarter low, raising speculation that the RBI may cut rates, potentially weakening the currency. Foreign investors have sold Rs 1.60 lakh crore of domestic equities in the past two months, adding to the pressure. The strength of the dollar, reflected in the dollar index crossing 106, has also strengthened the challenges of the rupee, which has depreciated by 70 points in the past month.
Forex reserves are running out as RBI intervenes
The RBI’s intervention has dented India’s forex reserves, which are now at a five-month low of $656.6 billion after a drop of $47 billion in seven weeks. Analysts fear that continued intervention could erode reserves, reducing the central bank’s ability to stabilize the rupee.
The region-wide decline adds to the concern
The rupee’s decline reflects a regional trend, with other Asian currencies weakening by 0.2 to 0.6 percent amid global pressure. US President-elect Donald Trump’s comments on income tax have added to the uncertainty.
Outlook: Analysts see more weakness ahead
Market experts remain vigilant. HDFC Securities predicts a range of 84.35-84.94/$, while Kedia Commodities and Emirates NBD see the rupee touching 85/$ soon. Motilal Oswal projects a steep fall to 85.50/$.
As the RBI’s policy meeting approaches, all eyes are on a possible rift within the Monetary Policy Committee, which could shape the rupee’s trajectory amid mounting global and domestic pressures.
