The US dollar is wreaking havoc against local currencies in 2024. The USD outperformed 22 out of 23 Asian currencies this year as it gained strength due to high Treasury yields. The Hong Kong dollar is the only currency that maintained its status against the raging USD. Even the Indian rupee managed to stand its ground against the US dollar in the currency markets and dipped slightly.
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The Indian rupee fell to a low of 83.63 in June but managed to briefly rise to 83.50 this month. While other local currencies fell to yearly lows, the Indian rupee is holding on and not facing a wipeout.
“If we observe, the rupee was very stable the entire year as compared to other emerging market currencies, we saw volatility only at the end of the financial year,” said V R C Reddy, Head of Treasury, Karur Vysya Bank to Business Standard. “Yuan depreciation and dollar strengthening led to the volatility in the last few trades,” he added.
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US Dollar Hammers Local Currencies, Indian Rupee Survives The Onslaught
The Japanese yen has fallen to a 38-year low against the USD. The Chinese yuan has dipped to its seven-month low vs the US dollar. However, the Indian rupee is down only 1.3% against the US dollar this year in 2024. The development indicates that the INR could bounce back when the USD weakens in the DXY index. Chances of the USD weakening this year remain slim as Treasury yields are high.
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The DXY index, which tracks the performance of the US dollar shows the currency trading at 105.63. It is looking to climb above the 106 mark and reclaim its high of 107, which it reached early this year. If the US dollar touches the 107 mark, the Indian rupee has more chances of slipping and could depreciate beyond 83.63.