Rupee dives to another record low against US dollar

The Indian rupee continued to extend its recent slide versus the US dollar today after the solid US jobs report cemented bets of more large Federal Reserve rate hikes. The rupee fell to a record low of 82.66, down from 82.33 from the previous session.

The rupee has been repeatedly posting record lows in recent sessions on concerns over oil prices, rising Treasury yields, FII outflows and offshore demand for the U.S. currency. The Reserve Bank of India’s interventions have not been able to arrest the slide in the rupee, unlike in prior occasions.

“The double whammy of higher US rates and higher crude prices is back to haunt the Rupee. While the RBI was able to defend the Rupee successfully through the last round of simultaneous stress on current and capital account by spending it’s Reserves, this time around things are likely to be different. After having exhausted a significant portion of its Reserves, RBI seems concerned about the burn rate of Reserves and appears to be spending them very judiciously. This has resulted in Rupee adjusting and aligning itself with fundamentals and it’s peer group currencies,” IFA Global said in a note. 

In the week through Sept. 30, India’s forex reserves declined to $532.66 billion, the lowest since July 2020. Reserves were at $537.5 billion the week prior.