The Indian rupee hit a new closing record low against the US dollar. This occurred as Asian currencies were sliding and forecasters predicted robust demand for the dollar due to ongoing US rate conditions. According to traders, frequent RBI interventions have successfully stopped depreciation.
The local currency’s intraday depreciation saw it go from an opening price of 83.14 to 83.11, close to the 83.29 record low set in October 2022. It dropped by 0.09 percent from its previous close of 83.14 and ended the day at an all-time closing low of 83.21 per dollar.
“Disappointing European data may further support the dollar.” Rising US Treasury yields and concerns about global economic growth may also affect the rupee. However, positive domestic markets may support the rupee at lower levels”, according to Anuj Choudhary, a research analyst at Sharekhan by BNP Paribas.
Positive US economic data kept the dollar strong and raised the chances of further interest rate increases. The yen dropped to a 10-month low. After encouraging service sector statistics, market odds of a quarter-point rate increase in November increased to 60% from 50%. Traders will use the US inflation figures due out next week to predict the course of future policies.
Domestically, Tapan Patel, Fund Manager – Commodities at Tata Asset Management, suggests that a weaker monsoon and low August rain deficits could add pressure. In addition, mounting fears that the US Federal Reserve may decide to extend its “hawkish pause” with high rates caused Asian currencies to trade more negatively, Patel said.
Following lower-than-expected US crude stocks, Brent oil increased to $90.50 per barrel.
According to Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, “As the dollar gained steam, the rupee fell close to its closing low as RBI’s presence seemed only to keep supplying dollars without changing its direction. The oil upside is another problem for the rupee as it goes through another rough day today despite fundamentals being one of the best amongst major economies.”
The value of Asian currencies was declining. The South Korean won fell by 0.33 percent, and the Indonesian rupiah lost 0.22 percent. Additionally, the Thai Baht, Taiwan dollar, and China Offshore all each declined by 0.2 percent. Meanwhile, the Malaysian ringgit suffered a smaller loss of 0.07 percent. However, the Japanese yen increased by 0.13 per cent while the Philippine peso increased by 0.3%.
The dollar index measures the US dollar’s strength against major currencies. It increased by 0.07 percent, rising from its previous close of 104.86 to 104.95.