New Delhi: The Indian rupee dropped to a lifetime low versus the U.S. dollar at open on Thursday, bogged down by higher U.S. Treasury yields and the dip in most Asian peers. After experiencing 2.19 per cent depreciation against the US dollar in the current financial year (FY25) so far, the rupee is expected to weaken further as the American currency is expected to strengthen given the US Federal Reserve’s indication of fewer rate cuts in 2025.
The rupee was quoted at 85.2400 to the U.S. dollar – a record low – compared to 85.20 on Tuesday. India’s financial markets were off on Wednesday.
“The pressure on the currency is likely to persist, driven by month-end dollar demand from local oil companies. Thus, we anticipate the USD/INR pair to trade within the range of 85 to 85.50 in the near term,” said Amit Pabari, managing director at FX advisory firm CR Forex.
State-run banks were spotted offering dollars, most likely on behalf of the RBI, traders said, which helped limit the local currency’s losses.
Major central banks such as the European Central Bank (ECB), Bank of England (BoE), and People’s Bank of China (PBoC) are likely to adopt more dovish stances, as their economies face significant growth challenges. This divergence in monetary policy between the Fed and other central banks is expected to sustain the dollar’s appreciation trajectory, said respondents. The dollar index rose to 108.15 on Thursday. It measures the strength of the greenback against a basket of six major currencies. Consequently, the rupee settled at a new low for the third consecutive trade at Rs 85.27 per dollar on Thursday.
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