India's rupee fell to a record low of 90.1325 against the dollar on Wednesday, breaching a key psychological level.
Delays in a US trade deal and high import demand are pressuring the currency, with analysts warning of further declines
if speculative pressures aren't curbed.
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India’s rupee slipped past the key psychological level of 90 per dollar on Wednesday, as delays in concluding a crucial
trade deal with the US continue to dent sentiment.
The currency weakened as much as 0.3% to a fresh record low of 90.1325. It pared losses after the central bank sold
dollars to stem the decline, according to people familiar with the transactions.
India is still among the few major economies yet to seal a trade pact with the US, though officials remain optimistic
about wrapping one up soon. In the meantime, steep 50% tariffs on Indian goods have weighed on exporters, while strong
imports have kept dollar demand high and added pressure on the rupee. Together, these pressures have played a role in
widening the country’s current-account deficit in the September quarter.
“Exporters are not selling dollars aggressively since the rupee is on a depreciating trend, while the dollar demand from
importers remains high,” said Ritesh Bhansali, deputy chief executive officer at Mecklai Financial Services.
Only a trade deal with Washington is likely to provide near-term respite to the rupee, according to Barclays
strategists. For now, with the key 90 mark breached, the currency could slip further to 90.30 in the coming days, HDFC
Kotak Securities Ltd. says the Reserve Bank of India will need to step in more decisively to curb speculative pressures
on the currency. The rupee has fallen 4.9% this year — the weakest performance in Asia — with this week’s slide coming
despite official data on Friday showing India’s economy expanded at its fastest pace in six quarters.
“If they allow the rupee to close above 90, we could see further speculative bets and the possibility of the rupee
heading to 91,” said Anindya Banerjee, currency analyst at Kotak Securities. The recent slide is “hard to justify on a
fundamental basis,” he said.
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