The Indian rupee plummeted to its weakest level on record on Monday, falling 0.2% to close at 84.6950, amid concerns over slowing economic growth and strong dollar bids in the non-deliverable forwards market.
The currency’s decline was triggered by disappointing corporate earnings for the June-September quarter, which led to outflows from local equities and a surge in dollar strength following Donald Trump’s US election victory. The latest data showed India’s economy grew 5.4% year-on-year in the July-September quarter, lower than expected, putting pressure on the Reserve Bank of India (RBI) for interest rate cuts.
Analysts expect the RBI to keep rates unchanged this week but predict a 25-basis-point cut in February. However, bankers believe that the surge in the central bank’s position in the NDF market reflects the extent of pressure on the rupee and suggests further falls are likely. The dollar index rose 0.3% to 106.3, while Asian currencies declined between 0.1% and 0.6%.
Source: https://www.reuters.com/markets/currencies/economic-growth-concerns-strong-ndf-dollar-bids-push-rupee-record-low-2024-12-02