The Indian rupee ended Monday’s trading session at a new all-time low of 88.10 against the US dollar. This was a small drop of just 1 paisa. This happened right after the rupee broke the 88-per-dollar level for the first time on Friday, when it closed at 88.09.
The native currency started out sluggish at 88.18 and quickly dropped to an all-time low of 88.33 over the day. Forex dealers say that this drop was caused by continuous uncertainty about trade relations with the US. This is especially true after India was hit with further trade tariffs, which have exacerbated concerns about the country’s trade deficit. The mood was also affected by the steady migration of foreign money out of the Indian stock market.
But the rupee was able to bounce back from its low point during the day thanks to a big rise in the domestic stock markets. The Sensex rose 554.84 points to close at 80,364.49, and the Nifty rose 198.20 points to 24,625.05. The US dollar index fell a little, but the local market was strong, which helped keep the drop from being too big. The dollar index, which shows how much the dollar is worth compared to six other major currencies, fell by 0.14% to 97.63.
Anuj Chaudhary, a research analyst at Mirae Asset ShareKhan, said that the rupee would likely stay under some pressure because of worries about trade tariffs, FII withdrawals, and rising crude oil prices. Brent crude was up 0.99% to $68.15 per barrel. He thinks that the USD/INR spot price will stay between 87.85 and 88.50 in the foreseeable future.
The Reserve Bank of India’s (RBI) most recent report also showed that the country’s foreign exchange reserves were going down. Forex reserves fell by $4.386 billion to $690.72 billion for the week ended August 22.
A report released on Monday said that the manufacturing sector’s development recorded the fastest improvement in over 17 years in August. This is good news for the Indian economy. The HSBC India Manufacturing Purchasing Managers’ Index (PMI) went up from 59.1 in July to 59.3 in August. This was because production was high and demand was strong.