The Indian rupee further dropped on Thursday, falling by 39 paise to close at a new lifetime low of 90.33 (provisional) against the US dollar. The currency has slumped so much due to continuous doubt about the long-awaited India-US trade agreement, which has continued to leave investor confidence weak in the past few weeks.
In the first week of December, the rupee already went over the psychological 90-per-dollar barrier, and the Thursday session had further fallen. At the spot interbank market, the domestic currency reached a new low of 90.48, as a result of protracted pressure due to outflow of foreign funds and because of a threat-shunning world. Analysts said that the US dollar weakness and domestic equities’ strength did offer some wriggle room, but they could not have counteracted the overall downward trend.
Contrary to the poor performance of the rupee, the Indian stock markets had recorded a rise in three consecutive days after losses. The reduction in interest rates by the US Federal Reserve by 25 basis points as a move was positively perceived by the investors as it favoured the mood of the market globally.
The BSE Sensex, which had gone down to 84,150.19 after touching off badly initially, came back very hard during the trading session. The benchmark index finally went down by 426.86 points or 0.51 at 84,818.13. The NSE Nifty50 was no exception, and it also recovered after going down to 25,693.25 intra-day and closed the day with a gain of 140.55 points or 0.55 per cent at 25,898.55.
According to market observers, the lack of progress made on the India-US trade deal, particularly towards the end of the year, is still putting a strain on the rupee. This, plus the continued withdrawal of foreign investors and economic uncertainties around the world, has exposed the currency to future weakness.
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