Why the rupee fell to a fresh record low against dollar

resr 5paisa Research Team

Last Updated: 23rd August 2023 - 04:39 pm

Listen icon

The Indian rupee has hit a fresh record low against the US dollar, after the US Federal Reserve hiked interest rates by 75 basis points and as Russian President Vladimir Putin threatened to escalate the Ukraine war. 

The rupee on Thursday fell to a new low of 80.285 against the US dollar at open. The Indian currency slipped 0.39% in the opening trade against yesterday's closing of 79.97. The local unit then extended its slide to touch 80.627 versus the greenback.

The rupee's previous record low against the greenback was 80.12 reached late in August.

Where is the US dollar index at right now?

After the US Federal Reserve hiked interest rates by 75 basis points last night but gave a more hawkish than expected projection, the US dollar index hit a new 20-year high at 111.72. The two-year US Treasury yield also climbed above 4% and the yield curve inverted further.

What has the Reserve Bank of India (RBI) been doing in the meanwhile?

The RBI has been selling dollars to moderate the depreciation in the Indian rupee. A Reuters report, quoting a government official, said the Indian government is not averse to a weaker rupee in line with global market fundamentals.

Could the Indian rupee fall any further against the US dollar?

Yes. According to experts, the rupee could fall further if the RBI decides to step back and not intervene any more. 

Analysts say that once the RBI allows the rupee to trade beyond 80 on a consistent basis, the currency could head towards 82.0 in a couple of months on account of the trade deficit and due to global recession and money supply tightening. 

Analysts say the RBI may not intervene as aggressively as it has done before as the US Fed has been hawkish this time.

FREE Trading & Demat Account
Open FREE Demat Account with endless opportunities.
  • Flat ₹20 Brokerage
  • Next-gen Trading
  • Advance Charting
  • Actionable Ideas
+91
''
 
By proceeding, you agree to our T&Cs*
Mobile No. belongs to
hero_form

Futures and Options Related Articles

Time Decay

by Tanushree Jaiswal 11th Oct 2024

Open interest data hints at a consolidation in index

by 5paisa Research Team 27th Feb 2024

New record for Nifty as index surpasses previous high

by 5paisa Research Team 19th Feb 2024

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing. For detailed disclaimer please Click here.

Open Free Demat Account

Be a part of 5paisa community - The first listed discount broker of India.

+91

By proceeding, you agree to all T&C*

footer_form