Indian Rupee Hits All-Time Low, May Fall Further by March
The Indian rupee dropped to a historic low of ₹86.40 against the US dollar. Experts predict the currency may weaken further, possibly reaching ₹87 by March 2025.
Volatility Trends Suggest Indian Rupee Weakness
Analysts point to increased odds of the rupee sliding further due to volatility trends. Akshay Chinchalkar, Axis Securities’ Head of Research, stated that the chances of the rupee hitting ₹87 by March jumped to 80%, up from 27% last month.
“Rising treasury yields and crude oil prices are hurting the rupee,” Chinchalkar explained. He highlighted the rupee’s unprecedented 16-week losing streak, marking a record in its history.
Strong US Dollar and High Oil Prices Impact Indian Rupee
The strengthening US dollar and surging oil prices have increased pressure on the Indian rupee. The US Dollar Index climbed to 109.98, its highest level since November 2022.
Ajay Bagga, a banking expert, said, “The rupee reflects global trends as currencies weaken against the dollar’s strength. Despite this, it outperformed other emerging markets (EMs) in 2024.”
Competitive Strategies for Rupee Stability
Bagga noted that emerging markets use currency devaluation to maintain export competitiveness. “Countries like China often devalue their currencies to tackle economic challenges. India should adopt similar strategies to stay competitive,” he advised.
Key Factors Driving Rupee Decline
Several factors are contributing to the rupee’s weakness:
- FPI Outflows: Foreign investors are pulling funds from Indian equities.
- Economic Slowdown: India’s sluggish growth dampens investment opportunities.
- Strengthening Dollar Index: High US bond yields are boosting the dollar’s value.
Indian Rupee Outlook
The rupee faces immediate challenges like high oil prices and FPI outflows. Experts believe a drop to ₹87 by March will be crucial. The rupee’s performance depends on domestic policies, crude oil prices, and global market conditions and any potential interventions by the Reserve Bank of India (RBI). With the global financial landscape in flux, the trajectory of the rupee remains uncertain.