Indian rupee hits record low as trade talks with US stall
India’s rupee slid to a fresh all-time low above 90 per dollar on Wednesday, continuing its recent downward trend, News.Az reports, citing AFP.
Traders partly attributed the decline to the delay in concluding a trade agreement with the United States.
The rupee has become one of Asia’s weakest-performing currencies this year, weighed down by India’s current account deficit and persistent foreign investment outflows.
Early trade negotiations between New Delhi and Washington had boosted hopes that foreign capital would pour into the world’s fifth-largest economy, helping the rupee strengthen to a nearly six-month high of 83.75 per dollar in May.
However, setbacks in trade discussions and disappointing corporate earnings have prompted overseas investors to sell more than $16 billion in Indian equities so far this year.
On Wednesday morning, the rupee weakened as much as 0.35 percent to a symbolic new low of 90.19, according to Bloomberg data.
But another key factor, Parmar added, was a lack of "big and impactful" intervention from India's central bank.
Analysts say the Reserve Bank of India (RBI) has this year sporadically defended the rupee through aggressive dollar sales to support key levels, but also appears of late to be allowing greater currency flexibility.
"Defending a specific level in the current macro backdrop would be costly and counterproductive," Raj Gaikar, research analyst at SAMCO Securities, told AFP.
"With inflation running well below earlier expectations, the policy priority has shifted toward supporting growth rather than expending reserves to hold an artificial line," he said.
The central bank was intervening only to ease volatility, not to reverse a trend driven by fundamentals, Gaikar added.
He expects the rupee to settle in a "88-92 range".
"This more hands-off approach signals a transition to a market-aligned regime rather than a rigid defence of symbolic levels," he said.
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