The Indian Rupee (INR) has reached new all-time lows against the U.S. Dollar, driven by several factors. One key influence has been the recent underperformance in domestic equity markets, which saw a sell-off amid concerns over global economic slowdown and heightened geopolitical tensions. This has dampened investor confidence, prompting foreign investors to pull out of Indian markets and causing the Rupee to depreciate further.
In addition to local equity weakness, external factors such as the strengthening U.S. Dollar, driven by rising U.S. interest rates and demand for safe-haven assets, have also contributed to the Rupee’s decline. High global crude oil prices have further pressured the Rupee, as India imports a large portion of its oil, which becomes more expensive with a weaker currency.
The Reserve Bank of India (RBI) has intervened in the currency market at times to limit excessive volatility, but persistent pressures have limited its ability to prevent a broader downtrend. This depreciation of the Rupee may have broad economic implications, impacting import costs and potentially increasing inflationary pressures in the economy.
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