Indian rupee weakens to record low on Monday

The Indian rupee weakened to a record low on Monday, pressured by a stronger US dollar and rising US Treasury yields. The currency briefly touched 84.0850 to the dollar before settling at 84.0775.

The surge in US bond yields, driven by expectations of a potential Donald Trump presidency and robust US economic data, has put pressure on emerging market currencies, including the Indian rupee.

To mitigate the impact of these external factors, the Reserve Bank of India (RBI) is believed to have intervened in the foreign exchange market to support the rupee. This intervention has helped to stabilise the currency and limit volatility.

However, the RBI’s ability to continuously intervene is constrained by its foreign exchange reserves. As a result, the rupee’s future trajectory remains uncertain, particularly in the face of potential capital outflows.

Foreign investors have pulled out a significant $10 billion from Indian equity and debt markets in October, exacerbating the downward pressure on the rupee.

Attribution: Reuters

Subediting: Y.Yasser