The Indian rupee slid to an all-time low of 86.4850 per dollar on Monday as the dollar index inches up. This was the biggest intra-day fall since December 27.
The dollar index hit over a 2-year high of 109.98 on Monday after the US non-farm payrolls data came much stronger than expected on Friday. The data has changed the market expectations for the US Fed’s interest rate cuts. Markets are now expecting the next 25 bps Fed rate cut in September 2025 versus earlier expectation of mid-2025, said Mihika Sharma, Associate Economist with CareEdge Ratings.
Plus, the hike in crude oil prices is weighing on the rupee after the US-sanctioned Russian oil producers and ships. Brent rose above $80 a barrel to its highest level in more than four months. These export curbs on Russian oil suppliers to top buyers China and India are hurting the Indian currency.
Importers bought the greenback due to the fear of further depletion in the currency, which further weighed on the rupee. Also, the FII outflow has dampened the local unit.
“We expect Rupee to remain weak on strong Dollar and weak tone in the domestic markets. Rising crude oil prices and risk aversion in global markets may also weigh on the Rupee. Traders may remain cautious ahead of inflation data from India and US this week. USDINR spot price is expected to trade in a range of Rs 86.25 to Rs 86.80,” said Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan.