Why Did The Indian Rupee Touch A Low Today?
The Indian rupee fell to a new low of Rs 84.37 against the US dollar, with a decline of Rs 6 paise from its previous close. The decline is associated with weak domestic equities and ongoing foreign fund outflows, which are negatively impacting market sentiment. Also, Donald Trump’s victory in the 2024 US presidential election has significantly impacted the Indian rupee.
Forex traders are also exercising caution ahead of the US Fed meeting outcome. On Thursday, November 7, 2024, the rupee opened at 84.26 against the US dollar and fluctuated between 84.26 and 84.38.
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Despite a correction in the dollar index that helped restrain the slide, the rupee ultimately settled at Rs 84.37; this marks a new lifetime low that was further followed by a Rs 22-paise depreciation on Wednesday.
The dollar index, which measures the greenback’s strength against six currencies, traded 0.22 percent lower at Rs 104.86. Meanwhile, Brent Crude, which is the global oil benchmark, fell 0.32 percent to $74.68 per barrel in futures trade.
Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, told The Hindu that they expect the rupee to trade with a negative bias due to the US Dollar’s strength following Donald Trump’s victory in the US Presidential elections and FII outflows.
However, softening commodity prices and easing geopolitical risk premiums may support the rupee at lower levels. It was said that the traders will be watching for cues from weekly unemployment claims data from the US and FOMC meeting decisions.
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The Bank of England’s monetary policy decision is also due, with both the BoE and FOMC expected to cut interest rates by 25 basis points. The USD/INR spot price is expected to trade in the range of Rs 84.15 to Rs 84.60.
As per the reports, Trump’s protectionist policies and “America First” approach are expected to lead to increased tariffs on Indian goods that may affect sectors like pharmaceuticals, textiles, and IT services. This could create headwinds for Indian companies with major US exposure, such as TCS, Infosys, and Wipro.
