This is the story of a national currency, the Indian Rupee (INR), being held hostage by global uncertainty and, let’s be real, a lack of clear intervention.
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The rupee just opened the month at a fresh low of ₹89.7 to a dollar. And experts are saying: if things stay this messy, expect it to stick around ₹89 to ₹90 all the way until late December.
It’s the fourth session straight of depreciation. And this is happening despite some pretty solid underlying economic strength, which makes the fall truly puzzling.
The Three-Part Stress Test
The rupee slide is driven by a convergence of factors, a real perfect storm, according to Dilip Parmar at HDFC Securities:
The Trade Deal Drama: The continuous delay in the U.S.-India trade deal is creating massive uncertainty, hitting market sentiment and flows.
RBI’s Non-Intervention: Analysts were watching the central bank, saying if they didn’t step in at the ₹89-per-dollar mark, the currency was going straight to ₹90. They didn’t.
The Trade Deficit: The widening gap between imports and exports is a structural drain on the rupee.
The Sentiment Problem
Aditi Gupta, an economist at BoB research, flagged a key observation: volatility, which was low early in November, suddenly spiked in the second half. She noted the depreciation is now largely a result of trader sentiment in the backdrop of all this uncertainty.
Here’s the kicker: the rupee was down 0.8% in November, but the dollar was also depreciating globally. Our currency failed to benefit from a weaker dollar, a sign that the local problems—like receding Foreign Portfolio Investor (FPI) interest in Indian equities—are weighing too heavily.
The experts have concluded the matter: if the uncertainty around the trade deal continues, the rupee will remain locked in that damaging ₹89 to ₹90 range.
Also read |Horoscope Dec 2: Cosmic Shift Brings Clarity & Transformation
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