Rupee hit a new low

The Rupee hit a new low, closing at 83.28 per Dollar on Wednesday, as the greenback gained strength against global currencies in the backdrop of Donald Trump emerging victorious in the US Presidential elections and rising treasury yields.

The Indian unit (INR) closed 0.2 per cent down against the previous close of 83.10. The central bank’s intervention through dollar sales prevented further depreciation of the Rupee, said forex dealers.

The dollar index rose about 1.5 per cent to 104.9 even ase the 10-year US Treasury yield climbed to a more than 4-month peak before pulling back to 4.43 per cent.

Amit Pabari, MD, CR Forex Advisers, noted that the Rupee slumped to an all-time low today after Donald Trump’s projected victory in the US presidential race. However, the Reserve Bank of India (RBI) intervened to mitigate the drop, providing support to cushion the rupee from steeper declines.

“Trump’s win has turned up the pressure on the Rupee, hinting at potential further depreciation as US policies continue to bolster the dollar. Despite this immediate impact, a longer-term view on the Dollar Index indicates a possible downtrend.

“Trump’s proposed tax cuts, without corresponding spending cuts, could expand the federal deficit, driving up debt and potentially pushing investors to demand higher interest rates, initially strengthening the dollar due to increased returns,” Pabari said, adding mounting debt may ultimately erode confidence in the currency.

He observed that the anticipated Fed rate cuts of 100 basis points in 2025 may weaken the dollar’s yield advantage, adding momentum to a bearish Dollar Index over the medium term.