Indian rupee slips to 1-month low today: What's the reason?
What's the story
The Indian rupee has slipped to its weakest level in almost a month, trading at 86.36 against the US dollar today. The decline comes as banks have been aggressively buying dollars and most Asian currencies have also weakened. The depreciation of the rupee could have a direct impact on the stock market as well as international travel plans.
Impact assessment
Bond yields remain stable
Despite the currency's fall, Indian stocks have managed to gain some ground while bond yields have remained stable. Forward premiums have also surged, indicating that banks and companies are taking steps to protect themselves from potential future risks associated with currency fluctuations.
Strategic moves
Banks buying dollars for corporate deals
Banks are buying more dollars for corporate deals and arbitrage, further pushing down the rupee as other Asian currencies also decline. Traders are also exercising caution ahead of important US trade negotiations. Amit Pabari, Managing Director at CR Forex said if talks fail or get delayed, it could add pressure on the rupee but a successful deal could provide relief in the near term.