Indian rupee reached the lowest ever closing rate on Tuesday, the fifth in a row of monthly losses as the growing trade tensions between India and the United States drove the demand towards the U.S. dollar. The rupee was trading at 88.7875 versus the dollar on Monday, which was 88.7600. At an earlier time in the day, the currency had hit a record low of 88.8000.
In September, the rupee dropped 0.7 per cent, as the currency had dropped by 5 per cent in the last five months. Analysts put the relentless depreciation down to a higher level of trade frictions between India and the U.S. that shook international investors and boosted outflows of Indian equities.
Current U.S. policies, such as 50% punitive tariffs on Indian products and a drastic rise in H-1B visa charges, are all likely to impact India more than any other nation. Such actions have made investors concerned about the potential revenue losses within the technology industry of India and have led to the expedited selling of Indian stocks. Already, foreign investors have pulled out over 2 billion dollars from the Indian market in the last six sessions alone.
Bankers and analysts cautioned that such measures would lead to further equity outflows, which would place more pressure on the rupee. The currency would have fallen even further without the intervention of the Reserve Bank of India (RBI) said a senior banker. RBI has been intervening aggressively to stabilise the rupee and prevent extreme volatility, but the external forces are still threatening the local currency.
According to experts, the weakness in the rupee is partly caused by the dynamics of international trade, but the domestic forces, like the power of the U.S. dollar and investor confidence, also contribute to the weakness. The rupee may continue to be pressured in the short term as U.S.-India trade relations may continue to be uncertain.
Click Here for Chhattisgarh News
Click Here for Entertainment News