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A broadly stronger dollar, along with weakness in the Chinese yuan, also pressured the Indian currency
The Indian rupee fell to a record low on Thursday (Jun 20), pressured by likely outflows and strong dollar demand from local importers.
The currency declined to a lifetime low of 83.6650 against the US dollar in the latter half of Thursday’s trading session, and was last quoted at 83.6425. It had closed at 83.4550 in the previous session.
A broadly stronger dollar, along with weakness in the Chinese yuan, also pressured the Indian currency during the day’s session, traders said.
The rupee has been hovering around record lows for weeks despite strong growth in the Indian economy, pressured by equity outflows and corporate dollar demand.
While foreigners have sold a net of US$2.6 billion of local equities so far this calendar year, dollar inflows into the debt markets have been strong at US$7.5 billion ahead of India’s inclusion in the JPMorgan Emerging Market bond index.
The central bank, however, has held the rupee in a tight band, preventing sharp appreciation amid inflows and tempered depreciation during times of dollar outflows.
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That support was absent on Thursday, allowing the currency to fall, a foreign exchange trader at a state-run bank said.
However, the record low won’t “be a matter of concern till it is holding above 83.80,” Sajal Gupta, executive director and head of forex and commodities at Nuvama Institutional said.
Any further depreciation is expected to be “quite gradual,” Gupta added.
The rupee’s weakness on Thursday was in sync with Asian currencies.
The offshore Chinese yuan was down 0.1 per cent at 7.28, its weakest level since November 2023. The dollar index was up 0.2 per cent at 105.4 while US bond yields ticked higher. REUTERS
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