The Indian rupee fell to a record low on Monday, hurt by concerns about a sluggish economy after the country’s GDP growth dropped to a seven-quarter low, while declines in most regional currencies also heaped pressure on the local unit.
The rupee fell to 84.6075 per U.S. dollar in early trading, weakening past its previous all-time low of 84.5075. The currency was last quoted at 84.6025 as of 09:45 a.m. IST, down 0.1%, as the Reserve Bank of India (RBI) likely intervened to prevent steeper losses, with traders citing dollar sales from state-run banks. India’s economic growth slowed much more than expected in the third quarter, which is likely to add pressure on the RBI to cut rates.
That could compound the rupee’s troubles, with the currency already pressured by a broadly stronger dollar and persistent outflows from domestic equities.
Foreign investors net sold about $2.5 billion of local stocks in November, adding to the $11 billion of outflows in October. Traders reckon that the weak economic data may spur fresh outflows from stocks, hurting the rupee.
Benchmark Indian equity indexes BSE Sensex and Nifty 50, were down by about 0.1% each.
“From a rates perspective, this week’s RBI December meeting is likely to be a close one, with possible increasing dissent out of some of its external MPC (Monetary Policy Committee) members,” Michael Wan, a senior currency analyst at MUFG Bank said in a note. Other Asian currencies fell between 0.2% to 0.6%, as the dollar gained after U.S. President-elect Donald Trump demanded that BRICS member countries commit to not creating a new currency or supporting another currency that could replace the dollar or face 100% tariffs. Routine interventions by the RBI to support the rupee have also weighed on India’s foreign exchange reserves, dragging them to a 5-month low of $656.6 bln as of Nov. 22, down $47 bln in last seven weeks.
