Rupee Hits Record Low Amid US Election Updates, RBI Likely Steps In
The Indian rupee fell to a record low following U.S. election updates, as the dollar surged on rising support for Donald Trump. The RBI is likely intervening to curb further depreciation.
Rupee
The Indian rupee hit an all-time low on Wednesday, falling to 84.1950 against the U.S. dollar as early results from the U.S. presidential election triggered a surge in the dollar. The central bank, the Reserve Bank of India (RBI), stepped in to curb the rupee's decline.
The rupee dropped about 0.1% from Tuesday's closing, but its decline was relatively modest compared to other Asian currencies. The offshore Chinese yuan, the Korean won, the Malaysian ringgit, and the Thai baht all fell by 1% to 1.3%.
The RBI's intervention, likely through dollar sales, helped limit the rupee’s drop. Experts suggest that while the RBI may tolerate a gradual depreciation of the rupee, it will prevent any sharp declines. Ritesh Bhusari, joint general manager for treasury at South Indian Bank, noted, “We don’t see the rupee falling below 84.25 on a sustained basis.”
Meanwhile, the U.S. dollar strengthened as the dollar index surged 1.5% to a four-month high of 105.19, driven by growing optimism for Republican candidate Donald Trump. Betting markets pegged Trump’s chances of winning at nearly 90%. His potential victory stoked fears of protectionist policies, including a 10% tariff on all imports and a 60% duty on Chinese imports. Trump had also criticised India’s high tariffs and hinted at retaliatory measures if elected.
U.S. Treasury yields jumped, with the 10-year yield rising 15 basis points to 4.44%, while U.S. equity futures rallied. As of the latest projections, Trump had secured 230 electoral votes, while Democratic candidate Kamala Harris had 187.
