Indian rupee hits record low as broad dollar strength weighs

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The Indian rupee declined to an all-time low as broad dollar strength weighed on most emerging Asian currencies.

The currency fell 0.3% to 83.67 against the greenback on Thursday, June 20, 2024, weakening past the previous low of 83.5750 touched in April, according to Bloomberg-compiled prices.

The dollar strengthened as the Swiss National Bank delivered an interest-rate cut, underscoring the divergence in monetary policies among global central banks as the Federal Reserve delays easing policy. In India, the central bank has allowed the rupee to weaken, though it intervenes to curb wild swings. The rupee is still the best performing currency in Asia this year after the Hong Kong dollar.

“US dollar strength is dominating the market at the moment and that is what is driving the rupee to a record low,” said David Forrester, a senior strategist at Credit Agricole CIB in Singapore.

The Reserve Bank of India has kept the rupee in a tight range, while focusing on building its foreign exchange stockpile to a record high to defend the currency. That’s made the rupee one of the least volatile across emerging markets, and the central bank is expected to continue accumulating reserves as foreigners continue flocking to the country’s bonds ahead of index inclusion.

“The weakness in the rupee is unlikely to continue as market is aware of RBI’s leanings,” said Shaun Lim, a currency strategist at Malayan Banking Bhd. “They have a preference for a stable INR and they have the means to achieve that.”