Indian Currency Hits All-Time Low Against the Almighty Dollar
The Indian rupee sank to an unprecedented low of 83.57 against the US dollar on Tuesday, surpassing its previous nadir as global market jitters grew ahead of major central bank meetings. Currency traders pointed to the unrelenting rise of the dollar against other global peers and rising caution in the face forex market ahead of the conclusion of the US Federal Reserve's policy meeting later this week.
Analysts noted that the greenback has strengthened to multi-year highs in recent months due to aggressive rate hikes by the Fed to combat high inflation. This has piled pressure on other currencies worldwide, with the rupee among the worst affected. Forex traders also expect volatility in the coming days as markets await crucial consumer inflation data from the US and India that could provide further cues about the trajectory of interest rate decisions.
While the depreciating rupee has hit importers hard by making overseas purchases more expensive, it also helps exporters by making their products competitive in overseas markets. However, the currency slide fuels inflation in India by making imported items costlier. With crude oil and commodity prices already elevated, a weaker rupee poses an additional threat to domestic price rise. Looking ahead, currency experts feel the rupee will see volatility within the 83.30-83.80 range against the dollar in light of upcoming economic releases. A lot will hinge on the Fed's stance and comments to guide monetary policy going forward.
