Business Desk: Rupee’s Alarming Slide: Dollar Claws to 88.50
The Indian rupee took a sharp hit against the US dollar, closing at a never-before-seen low of 88.50 on Tuesday.
This marked a drop of 18 paise from Monday’s finish at 88.32, underscoring the currency’s ongoing vulnerability in the forex market. It’s a fresh all-time nadir that has markets on edge.
FPI Sell-Off Fuels the Pressure
Foreign portfolio investors pulled back hard from Indian equity markets, offloading shares worth Rs 2,900 crore in just one day.
This rush to buy dollars spiked demand and piled extra strain on the rupee, as noted by Anil Kumar Bhansali, executive director at Finrex Treasury Advisors. Such outflows often signal shifting investor confidence in emerging markets like India.
Long-Term Shadows from US Policies
Experts highlight deeper worries, including potential US tariffs on Indian goods and steep fees on H-1B visas.
These moves could erode India’s export edge and remittance flows over time, adding to the rupee’s woes. While immediate triggers dominate headlines, these factors paint a tougher road ahead for the currency.
RBI’s Cautious Stance in the Mix
The Reserve Bank of India stands ready as a key dollar supplier, yet its direct steps to stem the slide remain measured. Even with Rs 7,500 crore flowing in from recent IPOs this week, it hasn’t offset the flood of dollar purchases.
Bhansali points out that such interventions are kept in check to preserve reserves for bigger battles.
Global Jitters Add to the Drag
Worldwide trade policy haze and investors shying away from risks have compounded the downturn. Amid this backdrop, the rupee’s early September low of 88.44 now feels like distant memory.
Broader caution in global finance keeps the pressure dialed up, with no quick relief in sight.
Fed’s October Move: A Glimmer?
On a brighter note, Shinhan Bank India‘s treasury head Kunal Sodhani sees a possible 0.25 percent rate cut from the US Federal Reserve on October 19.
Such easing could temper dollar strength and offer the rupee some breathing room. Still, until then, traders brace for more volatility in this unforgiving exchange.