The Indian rupee plummeted to a historic low of Rs 83.54 against the US dollar amidst continuous foreign fund outflows and escalating tensions in the Middle East. Learn more about the factors contributing to this decline and market reactions.
The local currency hit an intra-day low of Rs 83.55 per dollar, surpassing the previous record of Rs 83.48 set on November 10, 2023. Geo-political tensions and risk aversion among investors have dampened the rupee’s performance, reflecting a broader trend in emerging market currencies.
Market participants noted that the Reserve Bank of India (RBI) likely intervened by selling dollars through state-owned banks to stabilize the rupee’s depreciation. Traders anticipate resistance around the Rs 83.75 level, with the rupee expected to trade between Rs 83.40 and Rs 83.75 per dollar.
Despite the Indian rupee ‘s decline, it remains relatively stable compared to other Asian currencies, with the Indonesian rupiah experiencing the most significant depreciation against the dollar at 2 per cent.
Also Read : Indian Government Issues Travel Advisory for Israel and Iran
In the current financial year, the rupee has depreciated by 0.16 per cent, and by 0.4 per cent in the calendar year. However, it displayed remarkable stability in 2023 with only a marginal 0.5 per cent depreciation.
Market analysts attribute the rupee’s recent weakness to rising US yields and heightened risk aversion globally. The dollar index, which measures the greenback’s strength against major currencies, rose by 0.13 per cent to 106.34.
Furthermore, escalating tensions in the Middle East, reflected in Brent crude oil prices reaching $90.58 per barrel, continue to impact global markets.
Amidst these factors, analysts predict further weakness in the rupee towards Rs 83.75 per dollar in the coming days, driven by ongoing risk aversion and geopolitical uncertainties.
