The Indian Rupee has taken a deep plunge against the US dollar. INR noted an all-time low drop of 85.06 in the early hours of trade on Thursday, trading at lower levels by falling BY 12 Paisa in the process. The INR was trading at 84.95 earlier and has finally hit rock bottom of 85, in a new currency predicament.
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INR Nosedives: What Happened?
The Indian rupee noted a bearish price stance on Thursday, as the currency traded at 85.06 against the incredibly strong US dollar. The recent price weakening of the INR has primarily been spurred by the latest federal reserve rate cut predicament, which has bolstered the US dollar at press time. The hawkish Fed stance propelled the dollar to spark a new rally, crushing currencies like INR in the process.
However, it is to be noted that the rupee has lately been treading on weaker momentum. INR was earlier trading at the 84.90 level, sparked by a weaker trend in domestic equities, with the Indian markets projecting slow stock activity. At the same time, the consistent foreign fund outflows with weaker FII stats further crushed the INR, eroding it bit by bit.
Amid recent developments, the demand for the US dollar is also raging high, further pushing the INR to encounter new lows.
“A broad sell-off in equities, commodities, and bonds has kept the dollar well bid. We expect a slow and steady depreciation as the Reserve Bank of India (RBI) may protect key levels but may not change the direction.” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP
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Dollar Gains Immense Strength Amid Hawkish Fed Stance
The US Federal Reserve has announced a new rate cut decision, cutting the rates further by 25 bps. The aforementioned decision has prompted the US dollar to note a remarkable price rally, with the DXY index jumping to hit a spectacular 108.
In addition to this, Trump’s recent comments about putting tariffs on India are also adding pressure on the Indian currency.
“If they tax us, we tax them the same amount. … The word reciprocal is important because if somebody charges us—India, we don’t have to talk about our own—if India charges us 100 percent, do we charge them nothing for the same? You know, they send in a bicycle, and we send them a bicycle. They charge us 100 and 200. India charges a lot.” Trump said
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