Indian rupee continues downward spiral, poised to hit 82 units per dollar

New Delhi, Sep 28 (EFE).- The Indian rupee on Wednesday touched another all-time low, trading at 81.94 units per dollar as it approaches another grim milestone of 82 units as part of a devaluation spiral driven by the resurgence in the American currency.

This year the Indian currency has registered its worst performance in history, losing almost seven units to the dollar since January – when a USD was valued at less than 75 rupees – and far below its early 2018 exchange rate of 63.85 rupees per dollar.

Wednesday’s slide for the rupee came as “the dollar index surged to a two-decade high in early trade after US Federal Reserve officials reiterated the central bank’s hawkish stance,” financial consultancy EForex India said in its daily analysis.

Similarly, the weakening onshore yuan – traded in Chinese markets – which has reached its lowest exchange rate against the dollar since the 2008 financial crisis, could also affect the rupee, it added.

“A weaker yuan weighs on other Asian currencies such as the Indian rupee due to weakening export competitiveness,” the analysis said.

The Indian government has stressed that the rupee has been more stable against the dollar compared to other currencies, insisting that the Indian currency has resisted the slide very well if compared with the fluctuation in other currencies.

The Reserve Bank of India is set to hold a meeting of its monetary policy committee later this week, with the market expecting fresh measures related to key interest rates in order to protect the rupee and check inflation.

In its monthly report over the economy, the RBI said that inflation had remained above the tolerance band of six percent, adding that “the front-loading of monetary policy actions can keep inflation expectations firmly anchored and reduce the medium-term growth sacrifice.”

India’s foreign currency reserves have also dropped to $554 billion according to an RBI report published on Friday, marking their lowest level since October 2020. EFE

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