Rupee Closes Weaker After Hitting Record Low Against Dollar
The downward trend in the rupee has been persistent this week.
The Indian rupee closed three paise lower at 84.87 against the US dollar on Thursday. The domestic currency weakened to a record low of 84.88 against the greenback during trade.
The rupee opened flat at 84.85 for the second day in a row, according to Bloomberg data. It had closed at 84.84, after opening at 84.85 on Wednesday.
The currency had weakened by 12 paise on Tuesday, closing at a record low of 84.85. The downward trend in the rupee has been persistent this week, with the currency dipping to 84.73 against the dollar on Monday.
Exporters may hold back their positions with a stop loss at 84.70 as the rupee remains under pressure due to sustained dollar demand. Importers are advised to buy on dips, according to Anil Bhansali, head of treasury at Finrex Treasury Advisors LLP.
The rupee had shown some signs of stability last week, aided by the RBI’s decision to maintain steady interest rates and introduce measures aimed at enhancing market liquidity. The recent appointment of Sanjay Malhotra as the new RBI Governor marks a key development.
In response to the rupee's struggles, the RBI has taken proactive steps to stabilise the currency and attract foreign investment. One such move includes raising the interest rate ceiling on one-year Foreign Currency Non-Resident deposits by 200 basis points, bringing it to 400 basis points. Additionally, the RBI has increased the ceiling on FCNRB deposits with 3-5 year maturities. These measures are designed to boost capital inflows and will remain in place until March 31, 2025.
