The Indian rupee fell sharply to 84.42 against the US dollar on Tuesday, due to continued demand for the greenback from foreign and domestic banks. The decline surpassed the previous record low of 84.4125 reached last week. The currency finally closed at 84.4150, marking the smallest loss of the day.
Pressure from domestic oil companies and dollar-seeking importers was a key factor behind the rupee’s decline. Additionally, foreign banks’ dollar demand added downward pressure. Despite the steep decline, intervention by the Reserve Bank of India (RBI) helped stem further losses, as state-owned banks were seen offering dollars to the market from time to time.
Global Currency Trends
The broader market backdrop also weighed on the rupee. The dollar index, a measure of the US currency’s strength against a basket of major currencies, rose 0.2 percent to 106.4, adding pressure to emerging market currencies. While some Asian currencies, such as the Malaysian ringgit, made gains, others, including the offshore Chinese yuan, slipped during the session.
Traders noted that RBI’s consistent presence in the market has limited the rupee’s volatility. However, the currency remains under pressure due to a combination of strong dollar demand and global factors, including higher US interest rates and reduced risk sentiment.
Further devaluation may depend on the balance of dollar demand-supply dynamics and RBI’s willingness to intervene in the forex market. For now, market participants expect the rupee to trade near the current low, with possible interventions keeping a sharp decline in check.
