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Rupee Tumbles to Record Low as Outflows Bite
3 Dec
Summary
- Indian rupee hit a record low against the US dollar.
- Capital outflows and import needs pressure the rupee.
- Australian dollar gained after strong Q3 GDP data.
The Indian rupee reached an unprecedented low against the US dollar, surpassing the 90-rupee mark amid significant capital outflows and high import requirements. Analysts attribute this depreciation to a substantial imbalance between dollar supply and demand, exacerbated by a widening current account deficit and subdued foreign direct investment and portfolio inflows. This sustained pressure on the rupee highlights underlying economic vulnerabilities.
In contrast to India's currency struggles, other Asian markets exhibited relative stability. Most regional currencies held near flat levels, with investors cautiously anticipating a potential interest rate cut by the Federal Reserve next week. This uncertainty has led to cautious sentiment across markets, with traders closely monitoring upcoming US economic data, including employment figures and inflation indicators.
The Australian dollar, however, posted a notable gain, reaching a one-month high against the US dollar. This surge followed the release of strong third-quarter Gross Domestic Product data, indicating economic resilience. The Reserve Bank of Australia may maintain current interest rates due to renewed inflation pressures and firmer-than-expected economic growth.
