InvestorQ : Why is the Indian rupee once again falling so sharply?
Niti Shenoi made post

Why is the Indian rupee once again falling so sharply?

diksha shah answered.
2 months ago

Just couple of weeks back the Indian rupee had touched a level of 80/$, albeit briefly. Since then a mix of RBI support and strong Indian fundamentals allowed the rupee to gain all the way back to 78.50/$. However, in the last few days, with the Fed staying hawkish and chances of a US recession materializing, the rupee has once again come under pressure. This time it has rallied from 78.50/$ to a level of 79.85/$. This is a rapid fall in the rupee and the global headwind are just too strong for the current currency value.

The other big reason for the Indian rupee weakening was the sharp fall in the Chinese Yuan. The pressure on the Yuan put pressure on the Indian rupee too. Back in 2015, the Chinee weakening had resulted in the INR falling steeply. We could now see a repeat. The Yuan has depleted after the People’s Bank of China (PBOC) cut rates to boost the economy. The rupee closed on Monday at 79.86/$, very close to the psychological 80/$ mark. Even the Bloomberg Dollar Index (DXY0 is at 108.29, close to its 20 year peak.