The Indian rupee slipped to its lowest level in 2019, mirroring a sudden drop in Chinese yuan and a fall in local stocks. Besides, policy uncertainty on the local front and worries over a sustained slowdown are keeping the local indices under pressure recently.
Currently, the currency fell by 39 paise at 71.94 against US Dollar.
Further, the Chinese yuan has slumped to 11-year lows against the dollar, forcing state-run banks to support the currency by selling dollars.
On the economy front, in the minutes of the MPC meeting released on August 21, all six members of the monetary policy committee (MPC) voted unanimously on cutting the policy repo rate to deal with an economic slowdown. The RBI announced a 35bps cut in the policy repo rate to 5.40% on August 7, 2019, in its third bi-monthly monetary policy review. Slowing down of domestic demand is reflected in significant moderation in core CPI inflation and domestic economic activity has shown signs of further weakening, Reserve Bank of India governor Shaktikanta Das stated in the last monetary policy meeting on Wednesday.
On the international front, the minutes of the US Federal Reserve’s latest monetary policy meeting showed the central bank intends to remain flexible regarding future changes to interest rates. The minutes of the Federal Open Market Committee meeting held in late July showed members plan to pay close attention to the implications of incoming data for the economic outlook.