Rupee breaches 90 mark first time against dollar—Know reason why INR falling vs USD?

Rs vs Dollar: The rupee extended its slide on Wednesday and hit a fresh all-time low of 90.14 per dollar. This marks a third straight day of record lows for the domestic currency.

What's causing rupee (INR) to depreciate vs dollar (USD)?

The Indian rupee fell sharply past the crucial 90-per-dollar level for the first time ever as pressure from weak trade flows, portfolio outflows and uncertainty around the India-US trade deal continued to weigh on sentiment. The currency hit a new record low of 90.13 against the US dollar, breaking Tuesday’s all-time low of 89.9475.

Add Zee Business as a Preferred Source

Why rupees is falling against dollar?

Traders said the rupee remained under steady pressure through the session as concerns around stalled trade negotiations and persistent foreign selling limited any recovery.

“The rupee depreciation will halt and even reverse when the India-US trade deal materialises. This is likely this month. A lot will depend on the tariff details,” analysts said.

The sharp currency slide also spilled over into domestic equities. The Nifty slipped below the 26,000 mark, signalling cautious sentiment, while the Sensex fell nearly 200 points in early trade as worries around inflation and FPI activity grew.

Stock Market opened on muted note

The broader market opened on a muted note, with the Sensex later edging up 12 points to 85,151, while the Nifty slipped 18 points to 26,014 in early deals.

At the opening bell, HUL, Titan, Tata Motors PV, NTPC, BEL, Trent, Bajaj Finserv, Kotak Bank, Ultratech Cement, Maruti Suzuki, L&T, Power Grid and ITC were among the top losers.

Analysts said the continuous slide in the rupee has become a key concern for equity investors.

“A real concern now, which has contributed to the slow drifting down of the market, is the continued depreciation in the rupee and fears of further depreciation since the RBI is not intervening to support the currency,” they noted.

“This concern is forcing FIIs to sell despite improving fundamentals such as rising corporate earnings and strong rebound in GDP growth,” they added.

CEA V Anantha Nageswaran statement

Speaking at an event, Chief Economic Adviser V Anantha Nageswaran said the government is not worried about the falling rupee. He noted that the currency’s weakness has not pushed up inflation or hurt exports. He added that the rupee could see a recovery next year.

(With IANS inputs)