Indian Rupee Plunges to Record Low Amid Global Concerns

16 Apr 2024 , 01:12 PM

Indian rupee hit a historic low on Tuesday's open due to various factors. Concerns over an escalated conflict in the Middle East contributed to the rupee's decline.

Anticipation that the Federal Reserve would delay interest rate cuts further added to the currency's woes. The rupee opened at 83.5100 against the U.S. dollar, a decrease from the previous session's 83.4500.

This drop surpassed the previous record low of 83.4550 set on April 4. Concurrently, the dollar index reached a six-month high. Other Asian currencies also depreciated, notably, the Korean won and the Indonesian rupiah.

On Monday, U.S. Treasury yields increased, with the 10-year yield reaching its highest point since mid-November, causing Asian currencies and equities to lose ground. The U.S. dollar, in turn, strengthened against its major counterparts.

The rise in U.S. retail sales in March, which exceeded expectations, suggested that the U.S. economy remained robust, making a Federal Reserve rate cut in the current quarter seem improbable. This news further bolstered the U.S. Treasury yields.

Additionally, concerns about potential retaliation from Israel following Iran's attack over the weekend weighed on the appetite for the rupee and other Asian currencies. Israel's Prime Minister, Benjamin Netanyahu, held a second meeting with his war cabinet within 24 hours to discuss a possible response to Iran's actions.

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