The Indian rupee hits another record low closing at 90.19 against the US dollar, down 0.36% from the previous close. The currency has depreciated by over 5% on a cumulative basis this year against the greenback. Rupee’s losing streak has mainly been attributed to a stalled trade deal between India and US, sustained equity selling by foreign portfolio investors and a weak supply of the US dollar. Lack of intervention of the central bank further added to the downward pressure to the currency.
Rupee hits intra-day low at 90.30/$
The local currency plunged to a historic low of 90.30 in its intra-day session on Wednesday,falling 34 paise from its previous close The currency had already breached the psychologically important 90-per-level in the inter-bank order matching system yesterday.
Citing the major reasons for currency breaching the 90-level mark, Uday Kotak, Kotak Mahindra Banks’s Founder and CEO said, “Rs@90. The proximate reason: foreign selling of Indian stocks both FPI & PE under FDI. Indian investors buying. Time will tell who is smarter. For now foreigners seem smarter. 1 year nifty $ return is 0. But this a long game. Time for Indian business to shake out of comfort zone.”
‘Rupee slipped below the 90-mark for the first time, pressured by the absence of a confirmed India–US trade deal and repeated delays in timelines. Markets now want concrete numbers rather than broad assurances, leading to accelerated selling in the rupee over the past few weeks,’ Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities said.
CEA says rupee depreciation not affecting exports
However, sending some relief to the markets, Chief Economic Advisor, V Anantha Nageswaran on Wednesday said that the government is not losing sleep over the weakening rupee and it is expected that “INR will make a come back next year”. He further added that the falling currency is not affecting inflation or exports, he said on the sidelines of a CII event.
However, the outlook of rupee remains clouded with concerns about the final outcome of the India-US trade and the dollar strengthening ground. The greenback weakened amid growing expectations of a rate cut by the US Federal Reserve. Rupee has been one of the worst performing Asian currencies of recent.
RBI MPC
The central bank is expected to address the issue of the depreciating local currency at its ongoing MPC meeting. Markets now await the MPC meeting’s outcome.
