Rupee Hits Fresh All-Time Low Amid Persistent Global Headwinds

The Indian rupee plunged to a fresh lifetime low of Rs 88.8050 per US dollar on Monday, marking a deepening of pressure on the currency amid global and domestic headwinds.

The steep fall came after the rupee opened marginally stronger, rising by 6 paise to Rs 88.70 against the dollar, a small recovery before renewed selling.

As per Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP the domestic rupee was expected to open flat "after buying took it to a new closing low yesterday but with RBI supporting it did not cross the level of 88.80." He firther added that, "FPIs continue to be sellers in equity markets taking it down whenever it rises and with no further news on the Indo-US trade treaty markets are awaiting for the policy tomorrow to gauge what the RBI has in mind on the Rupee as well interest rate front."

Bhansali said that there could be some inflow on account of anchor investors of WeWork as also Nifty rebalancing which could take the rupee higher towards 88.60 but the dollar buying is so big that any dips get bought. "Exporters need to wait for selling forward while importers need to buy the dips," he said.

In January, UBS Group AG recommended that investors short the Indian rupee and adopt an underweight stance on Indian stocks. India's $4 trillion economy is entering a "structural slowdown", driven by weak credit growth, declining foreign direct investment, and a broader deceleration in the country’s economic performance, UBS said.

The brokerage's research pointed to a number of factors driving the slowdown, which it argues cannot be attributed solely to cyclical factors like oil-price hikes. The brokerage noted that one of the major worries is the significant reduction in FDI in the recent times.