The Indian rupee tumbled to an unprecedented low against the US dollar on Monday, inching perilously close to the 90 mark. The currency's fall was driven by sustained foreign capital withdrawals and heightened anxieties surrounding the pending India-US trade agreement.
Rupee Plunges Past Previous Record
During Monday's trading session, the domestic currency weakened to a fresh all-time low of 89.83 against the greenback. This downward move saw it breach its prior historic low of 89.49, which was recorded just approximately two weeks ago. The consistent pressure on the rupee reflects deepening concerns among investors and traders.
Key Factors Behind the Currency's Decline
Market analysts point to two primary forces weighing heavily on the rupee's valuation. First, there are persistent portfolio outflows, where foreign investors are pulling money out of Indian markets. Second, and equally significant, is the cloud of uncertainty around the India-US trade deal. Ongoing tariff-related tensions between the two nations have created a risk-averse environment, dampening overall market sentiment.
Implications and Market Outlook
The record-low rupee has immediate consequences for the Indian economy. A weaker currency makes imports more expensive, potentially fueling inflation. It also increases the cost for companies repaying foreign debt. The focus now shifts to the Reserve Bank of India's potential interventions and the progress in bilateral trade talks, which could offer some stability to the volatile forex market.
