Rupee Hits All-Time Low of ₹86.39/USD: Further Decline Ahead?

Aakhir Tak – In Shorts

1. The Indian rupee hit ₹86.39 per USD on Monday, a record low.
2. Strong US job data and a robust dollar intensified the rupee’s decline.
3. FIIs withdrew $4 billion this month, adding pressure on the currency.
4. Experts predict the rupee may slide to ₹88/USD in the coming months.
5. Hedging activities and global uncertainties have worsened the situation.

Aakhir Tak – In Depth

Rupee Hits Record Low

The Indian rupee plunged to an all-time low of ₹86.39 per USD on Monday, marking a 0.4% decline. The depreciation is part of a broader trend among Asian currencies, driven by the dollar’s strength.

Key Reasons for Dollar’s Strength

• Strong US Job Data:
  The US added 256,000 jobs last month, surpassing the expected 160,000, signaling economic resilience.
• Economic Stability:
  Growth in US services and manufacturing further reinforced the dollar.
• Fed Rate Cut Hopes Diminish:
  The new data reduced expectations for quick rate cuts by the Federal Reserve, bolstering the dollar further.

Impact of FII Outflows

• Foreign institutional investors (FIIs) pulled over $4 billion from Indian equities this month.
• In the previous quarter, withdrawals totaled $11 billion.
• Market fears about US policies and global uncertainty have aggravated bearish sentiments.

What’s Next for the Rupee?

Brad Bechtel of Jefferies highlighted that the rupee’s depreciation aligns with its trade-weighted Real Effective Exchange Rate (REER).
Market forecasts indicate further weakening, with predictions of ₹88/USD by March 2025.

Aakhir Tak – Key Takeaways to Remember

• The rupee hit a record low of ₹86.39/USD due to strong US economic data and foreign outflows.
• FIIs pulled $4 billion from the Indian market this month.
• Experts anticipate the rupee may further decline to ₹88/USD.

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