The Indian rupee declined by 18 paise on Friday (January 10), breaching the 86-mark against the US dollar for the first time.
It closed at 86.04 per dollar, pressured by a stronger greenback and significant foreign fund outflows, according to forex traders.
The rupee’s weakness was further exacerbated by surging crude oil prices and negative sentiment in domestic equity markets.
The dollar's strength was fuelled by increased demand amid expectations of restrictive trade policies under the incoming US administration, led by Donald Trump, who is set to take office on January 20.
At the interbank forex market, the rupee opened at 85.88 and briefly touched an intra-day high of 85.85 before sliding past the 86-mark to end at its lowest-ever closing of 86.04. This marks an 18-paise drop from its previous close.
On Thursday, the rupee had gained 5 paise to settle at 85.86, following a steep 17-paise decline in the preceding session.
Market estimates collated by Bloomberg indicate a nearly 60% probability of the rupee weakening to 87 per dollar by the end of March, compared to just a 9% likelihood of it strengthening to 84 during the same period.
Over the next six months, experts suggest the rupee could trade between 88.50 and 89.00, potentially regaining some of its lost competitiveness.
The report also highlighted rising market volatility, the highest in over a year, which has fuelled speculation about a shift in policy under the new Reserve Bank of India Governor, Sanjay Malhotra. Unlike his predecessor, Malhotra may allow the rupee to fluctuate more freely in line with market dynamics.
Meanwhile, the dollar index, which measures the US currency's performance against a basket of six major currencies, edged up by 0.01% to 109.01. The 10-year US Treasury yield climbed to 4.69%, its highest level since April 2024.
Global crude oil prices added to the rupee's woes, with Brent crude futures surging 1.96% to USD 78.43 per barrel.
The rise in oil prices and heightened volatility underline the challenges facing the rupee in the current economic landscape.
It closed at 86.04 per dollar, pressured by a stronger greenback and significant foreign fund outflows, according to forex traders.
The rupee’s weakness was further exacerbated by surging crude oil prices and negative sentiment in domestic equity markets.
The dollar's strength was fuelled by increased demand amid expectations of restrictive trade policies under the incoming US administration, led by Donald Trump, who is set to take office on January 20.
At the interbank forex market, the rupee opened at 85.88 and briefly touched an intra-day high of 85.85 before sliding past the 86-mark to end at its lowest-ever closing of 86.04. This marks an 18-paise drop from its previous close.
On Thursday, the rupee had gained 5 paise to settle at 85.86, following a steep 17-paise decline in the preceding session.
Market estimates collated by Bloomberg indicate a nearly 60% probability of the rupee weakening to 87 per dollar by the end of March, compared to just a 9% likelihood of it strengthening to 84 during the same period.
Over the next six months, experts suggest the rupee could trade between 88.50 and 89.00, potentially regaining some of its lost competitiveness.
The report also highlighted rising market volatility, the highest in over a year, which has fuelled speculation about a shift in policy under the new Reserve Bank of India Governor, Sanjay Malhotra. Unlike his predecessor, Malhotra may allow the rupee to fluctuate more freely in line with market dynamics.
Meanwhile, the dollar index, which measures the US currency's performance against a basket of six major currencies, edged up by 0.01% to 109.01. The 10-year US Treasury yield climbed to 4.69%, its highest level since April 2024.
Global crude oil prices added to the rupee's woes, with Brent crude futures surging 1.96% to USD 78.43 per barrel.
The rise in oil prices and heightened volatility underline the challenges facing the rupee in the current economic landscape.
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