Indian Rupee Hits Record Low Against U.S Dollar Central Bank Steps In
The Indian rupee weakened to an all-time low of 85.8075 against the U.S. dollar, before intervention by the central bank helped it trim steep losses, according to traders.
The currency settled at 85.5325, down 0.3% on the day, its worst single-day fall since June 4, when the surprise outcome of India’s general elections hit markets. The rupee fell nearly 0.3% on the week, its eighth consecutive weekly fall.
Concerns about India’s slowing growth and widened trade deficit have hurt the rupee alongside broad-based dollar strength amid a hawkish shift in the Federal Reserve’s policy outlook and expectations surrounding U.S. President-elect Donald Trump’s policies.
The Indian rupee has hit record lows for eight consecutive sessions.
Line chart showing price movement of the dollar-rupee currency pair
On the day, dollar bids related to the expiry of the December currency futures contract and maturing positions in the non-deliverable forwards market hurt the rupee, traders said.
The central bank’s absence earlier in the session in the face of strong dollar bids drove the rupee down sharply, traders said, prompting panic dollar buying from importers.
However, the Reserve Bank of India (RBI) “stepped in strongly” towards the close of the session, which helped the rupee recover, a trader at a private bank said.
The RBI “seems to be keen to let the rupee adjust and let the overvaluation correct against peers”, Abhishek Goenka, chief executive at FX advisory firm IFA Global said.
Currency Rates in Pakistan Today
The Indian rupee’s 40-currency real effective exchange rate, a measure of its competitiveness against peers, rose to a multi-year high of 108.14 in November, according to central bank data, suggesting an overvaluation of about 8%.
The dollar index was little changed at 108.1 while Asian currencies were mostly weaker between 0.1% and 0.4%.
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