Indian Rupee Falls to Record Low of 83.9375/$1

6 Aug 2024 , 12:49 PM

The Indian rupee fell to a record low of 83.9375 to a dollar today, driven by risk aversion amid concerns about the US economy potentially entering a recession. The escalation of geopolitical tensions in West Asia and outflows from foreign investors further compounded the rupee’s decline. Previously, the rupee had closed at a record low of 83.8450 to a dollar on Monday.

Despite market speculation about the Reserve Bank of India (RBI) intervening and selling dollars to support the Indian currency, the rupee continued its downward trajectory. Concerns about a likely recession in the US heightened after data last week showed that the unemployment rate in the world’s largest economy rose to a near three-year high of 4.3% in July.

Following the weak economic data, market participants have significantly increased their expectations of a 50 basis points rate cut in September. According to the CME FedWatch tool, there is a 75.5% probability of the US Federal Reserve cutting the federal funds target rate by 50 basis points to 4.75-5.00% in September, compared with just 13.2% a week ago.