Mumbai December 27 2024: The rupee dropped 0.6% to a fresh record low of 85.7437 per dollar on Friday, marking its largest single-day loss since February 2023. Concern over the nation’s trade deficit and slower economic growth have exerted pressure on the rupee, along with the dollar’s global strength.
The rupee, which is among the least volatile currencies in the world, has been setting new record lows this month as the dollar’s resurgence weighed on emerging-market currencies. Traders are watching the new central bank governor’s approach to foreign-exchange market interventions, which may allow for more volatility in the currency.
“The Reserve Bank of India is allowing the depreciation to happen because it doesn’t make sense to try and cap the rupee too much when there is a global trend towards a strong dollar,” said Anindya Banerjee, currency strategist at Kotak Securities. “Year-end dollar demand from importers, oil marketing companies and foreign investors has led to a sudden one-sidedness in the market.”
Governor Sanjay Malhotra, who took office this month, succeeded a monetary regime that had firmly curbed volatility in the currency. While he had not openly commented on the rupee, other officials in the past had said the RBI does not target a specific level in the currency.
