Pressure on the Indian rupee increased against the US dollar on Friday. The rupee fell five paise to its new all-time low of 84.37 (provisional) against the US dollar in the interbank forex market on October 8. Forex traders said that the US Federal Reserve’s recent decision to cut interest rates indicates a change in the global financial scenario. Furthermore, the global market may be affected by Donald Trump’s tax and trade policies, which may again cause instability in the rupiah.
It hit a low of 84.38
According to the news, the rupee opened at 84.32 per dollar in the interbank forex market. After oscillating between a high of 84.31 and a low of 84.38 during trading, it finally closed at 84.37 per dollar (provisional) with a drop of five paise. On Thursday, the rupee had fallen one paise to close at a record low of 84.32 against the US dollar.
What do the experts say?
Anuj Chaudhary, research analyst at BNP Paribas’ Sharekhan, said the rupee fell to a record low due to selling in domestic markets and continued withdrawal of foreign funds. Furthermore, rising crude oil prices also put pressure on the rupee. He said there is a fear that the rupee will trade with a negative bias due to the overall strength of the dollar and weakness in domestic markets. FII withdrawals may also put pressure on the rupee. However, any kind of intervention by the Reserve Bank can support the rupee at lower levels.
Federal Reserve rate cut
The dollar weakened after the US Federal Reserve cut interest rates by 0.25 percent, in line with market expectations. Federal Reserve chief Jerome Powell said the U.S. economy is strong and some downside risks have eased. In its latest monetary policy announcement, the US Federal Reserve cut its benchmark rate by 0.25 percent to a target range of between 4.5 percent and 4.75 percent. The local currency has weakened by 28 paise against the dollar in the last three sessions.
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