On Tuesday, the Indian rupee experienced a significant decline, plummeting to 83 against the American dollar, a record low it hasn’t touched in nearly two weeks. This depreciation is attributed to a probable surge in dollar outflows and an overarching trend of frailty evident among the Asian currencies.
The latest data indicated that the rupee was traded at 83.0050 against the greenback, a marked decrease from its previous standing at 82.7475 in the preceding trading session. This downslide seemed to be a trend observed across Asian currencies, as the offshore Chinese yuan also depreciated, coming close to 7.30 against the dollar, a development fueled by unsatisfactory service sector data emanating from China. The situation was most grim for the Korean won, which saw the steepest decline amongst its Asian counterparts, recording a nearly 1% depreciation.
Furthermore, the dollar index, a measure that compares the US dollar to a basket of six world currencies, registered a figure of 104.6, showcasing the relative strength of the US currency.
Market traders pinpointed a surge in dollar outflows as a significant catalyst for the rupee’s downturn. Discussions amongst traders have shed light on various potential causes, including substantial corporate outflows and a surge in equity-related outflows. Additionally, a segment of the trading community has been attributing this trend to an escalation in dollar purchases undertaken by oil corporations, indicating an intricate web of factors potentially contributing to the rupee’s current weak stance. As the situation unfolds, the market remains vigilant, keeping a close watch on the dynamic interplay of these factors in determining the future trajectory of the rupee.