Indian Rupee hits all-time low against US Dollar
The Indian Rupee (INR) has hit a record low against the US Dollar, sliding 13p to reach 84.73 today. The depreciation is attributed to unfavorable domestic economic data and the continued strength of the greenback in global markets. Forex traders have linked the decline to a general weakness in Asian currencies, following US President-elect Donald Trump's comments about potentially imposing a 100% tariff on BRICS nations if they undermine the Dollar.
Trump's tariff threat and strong Dollar pressure Rupee
The INR opened at 84.59 and hit a low of 84.73 during the day, closing at this record low. This comes after a similar trend on Friday, November 29, when the currency fell by 13p to another all-time low of 84.60. Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said, "We expect the rupee to trade under pressure due to a strong dollar and FII outflows .. Trump's tariff threat could further bolster the greenback."
Economic indicators and crude oil prices impact Rupee
India's slowing manufacturing sector growth (which fell to an 11-month low of 56.5 in November) and persistent foreign fund outflows are also undermining investor sentiment. Choudhary further noted that a recovery in crude oil prices may also weigh on the INR. The dollar index rose 0.51% to 106.2 while Brent crude surged 0.99% to $72.59 per barrel, adding to concerns over the Rupee's performance.
India's forex reserves drop amid GDP growth slowdown
India's forex reserves declined by $1.31 billion to $656.58 billion for the week ending November 22, following a record $17.76 billion drop last week. The Rupee's performance was also impacted by India's GDP growth slowing to a near two-year low of 5.4% in the July-September quarter, mainly due to sluggish manufacturing, mining, and consumption sectors. With continued FII selling, who offloaded ₹4,383.55 crore worth of shares on Friday, the INR's outlook remains cautious.
