Rupee sinks to a new all time low of 85.1975 per USD in intraday trading so far on Tuesday
Pressured by the strength of the US Dollar (USD) and a weak offshore Chinese Yuan, the Rupee continues to depreciate, plummeting to a new all time low of 85.1975 per USD in intraday trading so far on Tuesday.
Currently, the Rupee is trading at 85.1775/USD. The Indian unit had tested an intraday low of 85.12/USD on Monday before closing at a new record low of 85.1175/USD, down about 10 paise vis-a-vis previous close of 85.015.
Amit Pabari, MD, CR Forex Advisors, noted that amid shifting economic forces, the rupee is finding itself caught between global pressures and domestic uncertainties.
“The unrelenting strength of the U.S. Dollar, buoyed by the Federal Reserve’s hawkish monetary stance, has been a key driver behind the rupee’s struggle. Adding to the strain are a sharp decline in the offshore Chinese Yuan and robust month-end U.S. Dollar demand from importers.
“Domestically, a widening trade deficit and tepid economic growth are further weighing on the currency, while outflows from equity markets compound the challenge,” he said.
Pabari observed that in this volatile backdrop, the RBI is believed to have intervened in the forex market to curb excessive depreciation of the Rupee. By selling dollars in the forex market, the central bank aims to stabilise the rupee’s trajectory.
However, this comes at a cost, as India’s foreign exchange reserves have been steadily declining. Reserves, which stood at a peak of $704.89 billion in September, have fallen to $654.857 billion,as per the latest RBI data.