Rupee hits record low amid negative global cues; RBI support aids By Reuters
Rupee hits record low amid negative global cues; RBI support aids Reuters
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Indian Rupee Hits Record Low Amidst Global Cues and Central Bank Support
By Siddhi Nayak
MUMBAI (Reuters) – The Indian rupee dropped to a record low near the close of trading on Wednesday after yet another rangebound trading session as it stayed wedged between negative global cues and support from the central bank.
The rupee hit a lifetime low of 83.98 to the U.S. dollar in the last minute of trade. It closed at 83.9650, versus its previous close of 83.9675, having stayed in a narrow three-paisa range throughout the session.
Central Bank Intervention to Support the Rupee
“It is quite clear that the RBI (central bank) is defending the rupee,” said a trader with a private bank. “If it allows the rupee to go below 84, dollar bulls will be active and a move towards 84.25 will be quick.”
Over the last month, there were several instances when the Reserve Bank of India intervened on both sides of the forex market to support the currency.
This has led to the rupee holding a narrow range for extended periods. It has stayed in a 20-paisa range over the last month.
Global Market Impact
Meanwhile, the overnight weakness in U.S. equities, after data that indicated manufacturing activity remained weak, percolated to Asian and European equities.
The data has raised the odds of a 50-basis-point rate cut at the Federal Reserve’s Sept. 17-18 meeting to 42% from 30%, per the CME FedWatch Tool.
“With the Fed’s monetary policy meeting just a fortnight away, the market has already priced in a 25-basis point rate cut,” said Amit Pabari, managing director of CR Forex.
“However, any further deterioration in the data could reignite concerns, possibly prompting the Fed to consider a larger 50-basis point cut.”
Future Outlook and Impact on Global Rates
More clues on the direction of the Fed’s monetary policy pivot will be gauged after Friday’s U.S. payroll numbers, which will likely set the tone for global rates going forward. (This story has been refiled to add the dropped words ‘hit a,’ in paragraph 2)
SDGs, Targets, and Indicators
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SDG 8: Decent Work and Economic Growth
- Target 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7% GDP growth per annum in the least developed countries
- Indicator 8.1.1: Annual growth rate of real GDP per capita
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SDG 10: Reduced Inequalities
- Target 10.1: By 2030, progressively achieve and sustain income growth of the bottom 40% of the population at a rate higher than the national average
- Indicator 10.1.1: Growth rates of household expenditure or income per capita among the bottom 40% of the population and the total population
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SDG 17: Partnerships for the Goals
- Target 17.1: Strengthen domestic resource mobilization, including through international support to developing countries, to improve domestic capacity for tax and other revenue collection
- Indicator 17.1.1: Total government revenue as a proportion of GDP, by source
Source: investing.com
