On October 11th, the Indian Rupee plummeted once again, depreciating by 0.1% at one point and reaching a historical low of 84.0975.
It is worth mentioning that this is also the first time the Indian Rupee exchange rate has broken through the important threshold of 1 US dollar being equivalent to 84 Indian Rupees.
In fact, Wang Ye said that Finance has noticed that the Indian Rupee has been depreciating throughout the year, repeatedly setting historical lows.
So why has the Indian Rupee continued to fall recently?
For this, there are mainly two reasons behind it, let's look at them specifically:
On the one hand, there is a large outflow of foreign capital, especially in the form of liquidation sales of Indian stocks and bonds.
Looking at the specific data, according to statistics from Bloomberg, these foreign offshore investors have already sold $5.7 billion worth of Indian stocks and $125 million worth of Indian bonds just from October to now.
On the other hand, the expectation of interest rate cuts by the Reserve Bank of India (RBI) also puts pressure on the Indian Rupee to depreciate.Historically, the Reserve Bank of India (RBI) has placed a greater emphasis on stability, and the Indian Rupee has been in a narrow downward trend. Additionally, on October 9th, the RBI shifted its stance from hawkish to neutral, leading to speculation that India may be on the verge of lowering interest rates.
So, what will the trajectory of the Indian Rupee be moving forward?
In this regard, Shinhan Bank India, a subsidiary of Shinhan Bank in South Korea, has noted that the Indian government intervened at the levels of 83.98 and 83.99. However, due to the strong outflow following foreign investors' sale of Indian stocks and bonds, particularly in the stock market, the situation remains challenging.
Nevertheless, after the Indian Rupee's exchange rate broke through the significant threshold of 84, it will be crucial to observe when the RBI might intervene again.
MUFG Bank has also pointed out that, from the RBI's perspective, as long as the exchange rate fluctuations of the Indian Rupee are not too volatile, the RBI can maintain a certain level of foreign exchange competitiveness for the Rupee against other currencies.
What is your opinion on this matter? How do you think the Indian Rupee will perform in the near future?