Key points
- Strong dollar demand weighs currency
- Importers, oil firms drive pressure
- Global dollar strength hurts emerging markets
MUMBAI: The Indian rupee fell to a fresh record low, pressured by strong dollar demand from importers and corporates, as well as persistent global headwinds that have weighed on emerging market currencies.
According to Reuters, the rupee slipped to 91.77 against the US dollar, breaching its previous all-time low of 91.7425 hit earlier this week. The currency was down about 0.2 per cent on the day, despite some early support from exporter dollar sales.
Market participants said sustained demand for dollars from oil companies and other importers, coupled with overseas portfolio outflows, continued to exert downward pressure on the rupee. Dealers also pointed to strength in the US dollar globally, driven by expectations that the Federal Reserve will keep interest rates higher for longer amid resilient US economic data.
Emerging market
The dollar index hovered near recent highs, making it more expensive for emerging market currencies to hold ground. Asian peers also traded weakly, though the rupee underperformed due to domestic demand for dollars.
Traders said the Reserve Bank of India (RBI) was likely intervening intermittently to smooth volatility, but was allowing the currency to adjust gradually in line with broader market trends.
India’s widening trade deficit, elevated crude oil prices and concerns over global financial conditions have further added to pressure on the rupee in recent weeks.
Analysts said near-term movements will depend on global risk sentiment, crude prices and signals from major central banks, particularly the US Federal Reserve.
