The Indian Rupee dropped to a record low on Wednesday, driven by a strengthening U.S. dollar and weakness in domestic equities.
By How Much Did the Rupee Fall?
As per Bloomberg data, at 3:29 PM, the Rupee was trading at 85.8562 against the dollar, marking its lowest value to date.
By How Much Did the Dollar Rise?
The dollar index recorded a 0.1% increase, supported by a decline in other currencies like the Chinese yuan and a 0.4% dip in the Indonesian rupiah, according to a Reuters report.
Dollar sales by state-run banks helped contain the Rupee’s losses, but these efforts were described as “not very aggressive,” the report added.
What Caused the Rupee to Decline?
The Rupee‘s depreciation was attributed to the dollar’s strength, bolstered by the U.S. Federal Reserve’s hawkish stance in December. The Fed’s approach led to increased investor confidence in the dollar.
Additionally, while the Federal Reserve has indicated a potential 50 basis-point rate cut in 2025, investors are only pricing in a 38 basis-point reduction, which also supported the dollar’s rise.
Domestic factors further compounded the pressure on the Rupee. Indian equity markets have exhibited recent volatility, with both the BSE Sensex and NSE Nifty trading flat but remaining in correction territory. Foreign investors have sold approximately $2 billion in equities and bonds this month, adding to the currency’s woes.
