Rupee Hits Record Low: Will India's Economy Find Stability?
Image Source: Internet
The Indian rupee has hit a fresh record low, trading at ₹90.42 against the US dollar, amidst persistent dollar demand from corporates and lenders. Despite the US Federal Reserve's rate cut, the rupee's value has been weighed down by heavy dollar buying, largely driven by merchant and corporate payments. The rupee's decline has been the worst in a year, with analysts warning that failure to secure a trade accommodation with Washington could lead to further losses. The Reserve Bank of India is set to inject liquidity into the banking system with a $5 billion dollar-rupee buy/sell swap next week, aimed at stabilising short-term volatility. Finance Minister Nirmala Sitharaman has urged caution in politicising the rupee's weakening, stating that the currency will find its own level. She emphasized the need to view currency movements in the broader context of India's economic fundamentals, rather than being swayed by short-term fluctuations. The RBI's intervention is expected to provide relief to the rupee, but the long-term impact of the US trade tariffs and uneven foreign portfolio flows remains a concern. As the rupee continues to slide, India's economy is under pressure, with experts warning of a prolonged period of instability unless a trade accommodation is secured.
