INR sees worst monthly decline in 3 years: Here's why
What's the story
The Indian rupee has registered its worst monthly decline in nearly three years, largely due to US tariff concerns and ongoing portfolio outflows. The currency hit a five-month low of 87.74 today after US President Donald Trump's threat of a 25% levy on Indian exports, along with an unspecified penalty, starting tomorrow. It closed at 87.5950, down by 0.2% for the day.
Market outlook
RBI intervenes to prop up rupee
The Reserve Bank of India (RBI) is said to have intervened to prop up the rupee yesterday and today, albeit not aggressively. Traders fear that without any positive developments in US-India trade talks, the rupee could fall below its record low of 87.95. QuantEco economists predict that the rupee may weaken toward 89.50 levels by March, due to a recovery in dollar sentiment and heightened global geo-economic uncertainties.
Investor activity
Foreign investors sold Indian equities
The rupee's decline is also being fueled by foreign outflows, with foreign investors net selling Indian equities worth $2 billion in July. India's equity benchmarks, the Nifty 50 and Sensex, fell as much as 0.9% in early trading but managed to pare losses and close about 0.3% lower today. Other Asian currencies also fell due to weak Chinese economic data and the looming August 1 US tariff deadline.