Indian rupee drops to all-time low
The Indian rupee declined to a lifetime low yesterday (3 December), pressured by the US dollar's rally against its major peers and on concerns over the Asian country's slowing growth rate.
The currency fell to 84.7425 against the dollar, surpassing the previous record low of 84.7050 reached just a day earlier, on December 2.
The rupee's decline mirrors broader weakness among Asian currencies, with the offshore Chinese yuan also hitting its lowest level in a year. Meanwhile, the US dollar index climbed to 106.50, buoyed by a weaker euro and overall investor demand for the greenback.
Monday’s 0.25% fall marked the rupee's steepest single-day percentage drop in six months, triggered by disappointing GDP data from India. The unexpected extent of the rupee's slide surprised market participants, given the Reserve Bank of India's (RBI) ongoing efforts to stabilize the currency through interventions at critical levels.
Dhiraj Nim, an FX strategist and economist at ANZ, attributed the rupee's downward trajectory to India's weakening economic indicators. "India's poor macroeconomic setup, coupled with a decline in the RBI's foreign exchange reserves, points to an unavoidable path of further rupee depreciation," he noted in a recent report.
India's foreign exchange reserves have been declining for eight consecutive weeks, reaching their lowest level in five months, further compounding the pressure on the currency. Analysts suggest that this trend, combined with lackluster growth, may deter portfolio investors and weigh heavily on the rupee in the near term.
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