Dollar Rupee: The new year did not bring any relief for the Indian Rupee. The domestic currency continued its downward trail as the prospects of the Federal Reserve's slow pace on rate cuts sent the greenback to an all-time-high.
Rupee Record Low: The domestic currency took another hit on Friday as the Federal Reserve's slow pace of rate cuts sent the greenback to an all-time-high
Dollar Rupee: The new year did not bring any relief for the Indian Rupee. The domestic currency continued its downward trail as the prospects of the Federal Reserve's slow pace on rate cuts sent the greenback to an all-time-high.
On Friday, the dollar was set to mark its best weekly performance in over a month. And this surge was not just owing to the Fed's stance on interest rates, but also the resilience of the US economy. Many believe that the country's economy will continue to outpace its global peers.
The greenback reached a two-year high of 109.54 against a basket of currencies on Thursday, signalling quite a strong start in 2025. Besides a hawkish Fed and robust economic performance, there was one more reason that pushed the currency to a record high: Trump's re-entry into the White House.
Since, his victory in the US presidential election, the dollar has been on a a straight upward trend. And this optimism was not limited to just the currency's performance, but US equities and bond yields as well.
Albeit, the equity market did witness a choppy ride just a few days back, the performance of the US stock market continues to be one of the best among its peers.
Undoubtedly, the greenback's rally is bringing cheer to the overall sentiment. However, this upward trend is weighing heavily on the rupee, which hit another record low on Friday. The rupee closed at 85.7 against the US dollar and many are already predicting that the domestic currency could reach a new low of Rs 86 in the coming days.
While the Reserve Bank of India's (RBI) intervention has saved the Rupee from falling further, the downward trail is not hitting a pause button as other factors like a bulging trade deficit, are also adversely impacting the currency's value. As per a report by ICICI Bank, India's current account deficit (CAD) is expected to stay at 1.1 per cent of the GDP in FY25.