The Indian Rupee has hit a record low against the US Dollar, closing at 85.77 on Friday, marking its ninth consecutive week of losses. This decline is attributed to the weakening of the Chinese yuan, which fell past the 7.3 mark, along with the rise of the US Dollar. The rupee reached its lowest intraday level at 85.80 before settling at 85.77, down 2 paise from its previous close.
Foreign exchange reserves in India have also dropped for the fourth consecutive week, reaching an eight-month low of $640.3 billion as of Dec 27. Foreign currency assets decreased by $4.6 billion to $551.9 billion, while gold reserves increased by $541 million to $66.3 billion. Special Drawing Rights (SDRs) fell by $12 million to $17.9 billion, and India’s reserve position with the IMF remained unchanged at $4.2 billion.
The rupee depreciated by 0.2% over the week, with the dollar index rising above 109 due to expectations of fewer rate cuts and a robust US economy. Despite a slight drop in crude oil prices, Brent crude still fell 0.4% to $75.60 per barrel.
Traders are closely monitoring US economic data, including the upcoming jobs report and inflation data, which could impact the rupee further. Analysts predict the rupee may reach 86/$ in the short term, with corporates buying the dollar on dips while the RBI ensures an adequate supply of the greenback at higher levels.
Expert Jateen Trivedi of LKP Securities highlights the influence of a strong dollar index and rising crude prices on the rupee’s current situation. With all these factors at play, the future of the rupee remains uncertain, and both traders and officials are keeping a close eye on the market for any potential shifts.
