The Indian rupee closed at a record low of 84.86 against the US dollar on Monday, falling nearly seven paise from its previous close of 84.79. Earlier in the week, the rupee hit an intraday low of 84.88 on Thursday before recovering on Friday, aided by a rebound in the equity markets.
The rupee’s decline on Monday was largely driven by global factors, including a weaker Chinese Yuan and rising US bond yields. A depreciating Yuan adds pressure on the rupee due to trade dynamics, while increasing bond yields tend to redirect capital flows from emerging markets to the US.
The Chinese Yuan came under strain after disappointing retail sales data and signals from China’s Central Bank suggesting further reductions in cash reserve requirements—moves that could put additional pressure on the Yuan.
Meanwhile, the dollar index held steady at 106.88, as market participants awaited the US Federal Reserve’s interest rate decision scheduled for Wednesday. The Fed is expected to lower rates by 25 basis points, though dealers anticipate uncertainty regarding future guidance, particularly considering President-elect Donald Trump’s stance on tariffs.
Despite this recent depreciation, the Indian rupee has outperformed many other Asian currencies, according to a government response to a parliamentary query last week.
