Rupee Closes At Record Low Against US Dollar
Rupee had opened at a low of 84.79, weakening by 6 paise from its previous close.
The Indian Rupee weakened by 12 paise to close at a record closing low of 84.85 against the US dollar on Tuesday. During the day Rupee weakened by 13 paise to a fresh a record low of 84.86 against the US Dollar during the trade after it opened lower on Tuesday. Rupee had opened at a low of 84.79, weakening by 6 paise from its previous close.
The rupee had closed at 84.73 against the US dollar on Monday, after opening at 84.66 in the morning trade. The previous week saw some positive momentum for the domestic currency, with the RBI's Monetary Policy Committee keeping interest rates steady and announcing measures aimed at improving liquidity in the financial markets. On Friday, the rupee had strengthened by 3 paise, closing at 84.7.
On Monday, the government announced the appointment of Sanjay Malhotra as the new RBI governor, as Shaktikanta Das' tenure came to an end.
"This marks the end of Shaktikanta Das' six-year tenure, which concludes on Tuesday. Under Das' leadership, the RBI skillfully managed rupee volatility and shielded the currency from significant depreciation. However, the announcement of the leadership change triggered a notable reaction in the currency markets, with the USD/INR pair surging to a record high of 84.86 in the Non-Deliverable Forward (NDF) markets," said Amit Pabari, managing director of CR Forex Advisors.
In an effort to stabilise the rupee and attract more foreign capital, the RBI had taken several key actions last week. The central bank raised the interest rate ceiling on one-year Foreign Currency Non-Resident deposits by 200 basis points to 400 basis points. It also increased the ceiling for FCNRB deposits for 3-5 year maturities. These changes are intended to bolster capital inflows and will remain effective until March 31, 2025.
The RBI also implemented a 50 basis point reduction in the Cash Reserve Ratio, which is expected to infuse Rs 1.16 lakh crore into the banking system. This reduction, which will occur in two stages starting Dec. 14, is part of the central bank's broader effort to boost liquidity. Additionally, the RBI revised its real GDP growth forecast for the current fiscal, lowering it from 7.2% to 6.6%, signaling a more cautious outlook for India’s economic performance.
