The US dollar has once again battered the INR in Forex. The USD has claimed a high of 104, beating the INR down. The Indian rupee trades at 84, the lowest point the currency has ever encountered.
The possible sell-off in the US and Asian equities markets, followed by increased foreign outflows, tugged at the INR, compelling it to document an all-time low of 84.
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Indian Rupee vs. US Dollar: Why Is INR Dropping?
Global Equity Market Impact
Monday morning was heavy on the global equity as the markets noted widespread low stock dynamics. With nearly $2 billion liquidated from the stock market, significant indices worldwide reported low metrics, indicative of slow economic development.
This development led to low demand for the INR, which caused its value to note a significant price decay.
Crude Oil Prices
Similarly, other factors contributing more to the INR metric drop were surging crude oil prices. As the third largest oil consumer, higher crude oil prices led the INR to encounter a higher trade deficit, which may have further battered the Indian currency.
Geopolitical Narratives
Apart from general indicators battering the INR, changing geopolitical narratives and speculations concerning the US recession and WW3 are also amplifying demands for increased oil pricing, which is again adding pressure on the INR.
It was earlier reported that foreign institutional investors have lately been selling Indian equities rapidly. This also leads to lower INR demand, stressing its global value and prestige.
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The US Dollar and The US Economy: An Outlook
The US dollar is currently trading at the 104 value level, up 0.29%, after facing an intense stock meltdown. The markets are recovering rapidly, which indicates that the USD is healing from its earlier equity trauma.
US Elections & The Dollar Effect
With the ongoing US elections, the US dollar metric may occasionally fluctuate as investors anticipate the outcome.
Economic Sentiment
The Kobeissi Letter detailed the US economy and outlined Americans’ belief that they are currently living in a recession-laced world.
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“In a recent poll, 55% of Americans believed that we were in a recession. Many people are working multiple jobs just to afford necessities. And owning a home is now a luxury. This is not a soft landing.”
With the multipolar currency narrative and rising debt numbers, the US economy attracts more foes.
However, in the long haul, the USD is set to regain its pace and is predicted to maintain its status as the global reserve currency.