Indian Rupee Hits All-Time Low Amid US Recession Fears
The Indian rupee depreciated to its lowest value ever against the US dollar on Monday, trading at 83.85. This decline is due to global market weakness and fears that the US might enter a recession.
Market Reactions
At 12.18 pm, the rupee traded at 83.85, down from Friday’s closing of 83.75. It opened at 83.78, surpassing the previous low of 83.7525 from Friday. Analysts say the rupee’s fall aligns with global market weakness, US recession fears, and geopolitical tensions.
Analysts’ Views
Ajay Kedia from Kedia Advisory said, “US recession concerns led to worries about foreign outflows from India and emerging markets.” He added that the selloff in US and Asian equities, following a disappointing US jobs report, has intensified these concerns.
The US jobs report showed only 114,000 jobs added in July, below the expected 175,000. The unemployment rate also rose to 4.3%, and wage growth slowed.
Future Predictions
Kedia mentioned that the Reserve Bank of India (RBI) might allow the USD/INR to move higher to 83.90, with support at 83.45 and resistance at 83.95. Breaking 83.95 could push it to 84.10/84.20.
Jamal Mecklai, a financial market veteran, said, “US recession fears and equity market collapse would create a risk-off sentiment. The rupee will naturally take some pressure.”
Historical Context
In 2022-23, the Indian rupee was under pressure due to various factors like monetary policy tightening, the war in Ukraine, and the strengthening of the US dollar. The rupee depreciated over 11% in 2022, hitting an all-time low in mid-October. The RBI’s interventions in the forex market helped stabilize the rupee.
The RBI monitors the foreign exchange markets and intervenes to maintain orderly market conditions, containing excessive volatility without targeting any specific level.
Doubts Revealed
Indian Rupee -: The Indian Rupee is the money used in India. It’s like how we use rupees to buy things in India.
All-Time Low -: All-Time Low means the lowest value ever. It’s like getting the lowest score in a game.
US Recession -: A US Recession is when the economy in the United States is not doing well. People might lose jobs and businesses might not make much money.
US Dollar -: The US Dollar is the money used in the United States. It’s like how we use rupees in India, they use dollars in the US.
Trading at 83.85 -: Trading at 83.85 means that 1 US dollar is worth 83.85 Indian rupees. It’s like saying 1 chocolate costs 83.85 rupees.
Global Market Weakness -: Global Market Weakness means that economies around the world are not doing well. It’s like many countries are having money problems at the same time.
Foreign Outflows -: Foreign Outflows mean money is leaving India and going to other countries. It’s like people taking their money out of India and spending it somewhere else.
US Jobs Report -: The US Jobs Report tells how many people have jobs in the United States. If the report is bad, it means not many people have jobs.
Reserve Bank of India -: The Reserve Bank of India (RBI) is like the boss of all banks in India. It makes important decisions about money and banking in the country.
Support at 83.45 -: Support at 83.45 means that the value of the rupee might not go below 83.45. It’s like a safety net to stop it from falling more.
Resistance at 83.95 -: Resistance at 83.95 means that the value of the rupee might not go above 83.95. It’s like a ceiling that stops it from going higher.