Rupee Plunges To Fresh Record Low Amid Global And Domestic Headwinds
The rupee depreciated 10 paise to close at 89.97 against the US dollar on Wednesday
The Indian rupee tumbled to a new all-time low of Rs 90.4825 on Friday following a mix of negative global cues and domestic pressures.
Anil Kumar Bhansali of Finrex attributed the slide to a flurry of adverse developments, uncertainty over a trade deal, Mexico’s decision to impose tariffs of up to 50% on Asian imports, including from India, higher yields in US and Japanese debt markets, and continued foreign institutional selling in government securities.
The rupee fell to 90.08 a dollar on Wednesday, "the fall in yields by 15 bps yesterday in the evening indicates that market participants are selling the Govt. Bonds despite a rate cut and an expectation of a rate cut in February when we have the last monetary policy of the Financial Year," Anil Kumar Bhansali of Finrex said
The rupee depreciated 10 paise to close at 89.97 against the US dollar on Wednesday, tracking a negative trend in domestic equities and sustained foreign fund outflows.
On Tuesday, the rupee settled up 18 paise at 89.87 against the US dollar.
"We expect the rupee to trade with a negative bias on weak domestic markets and FII outflows, which continue to pressurise the rupee. Delay in trade deal between India and US may further dent the rupee," Anuj Choudhary, Research analyst, Mirae Asset ShareKhan, said as per PTI.
A delegation led by Deputy US Trade Representative (USTR) Rick Switzer is in the national capital for two-day trade talks with his Indian counterpart Rajesh Agrawal.
Earlier in January, UBS Group AG had 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 or government spending cuts.
