The Indian rupee fell to a record low against the greenback this Tuesday, reflecting the weakness of Asian currencies following Trump’s victory in the U.S. elections. The constant outflow of foreign funds from Indian equities also weighed the rupee’s value. Foreign investors withdrew around $3 billion from Indian stocks in November after pulling out $11 billion in October, further weighing the INR.
The Indian Rupee came down to 84.4125 against the USD and settled at 84.3925. With this, the currency fell to record lows for five straight sessions. On the other hand, Donald Trump’s victory in the U.S. elections boosted the dollar index and raised it to 1.8%. The Dollar index rose 0.3% to reach 105.87 on Tuesday, the highest value since July.
Other Asian currencies, like the Yuan, declined by 1.2%, and the Thai Baht saw a 1.6% depreciation. This constant fall in Asian currencies also put pressure on INR. However, INR has outperformed its regional peers, with depreciation restricted to 0.4%.
ING Bank stated in a note, “As the dust settles after last week’s US election results, global markets are settling into core trades of a firmer dollar, higher US equities, and higher terminal rate from the Fed.”
India’s top equity indexes, the BSE Sensex and Nifty 50, fell 1% on Tuesday amid all this. It was the fourth straight daily fall of botch equity indexes and highlighted the weakening state of the INR. Further, the RBI’s intervention to limit the INR’s losses caused India’s foreign exchange reserves to drop for five straight weeks, hitting $628.13 billion, a two-month lowest. If the situation remains the same Rupee might see further depreciation.
