Indian rupee slips to all-time low of 88.46 against Dollar
What's the story
The Indian rupee has hit an all-time low, trading at 88.46 against the US dollar today. The fall comes despite a slight easing of the dollar in Asian markets. Here, the currency opened at 88.41, lower than yesterday's close of 88.31, and quickly reached the new low in early trade today.
Policy impact
Rupee's weakness attributed to US protectionist measures
Traders have attributed the rupee's weakness to recent protectionist measures by Washington. The US has imposed higher tariffs on Indian exports than on other Asian countries and increased H-1B visa fees for new applications. Market participants fear that these changes might hurt India's IT services sector and slow the remittance inflows from the US, which accounts for nearly a third of India's overseas remittances.
Remittance concerns
DBS Bank warns of threat to India's remittance status
DBS Bank has warned that India's status as the world's largest remittance receiver could be threatened by "steady tightening in work-related visas in the US." A Mumbai-based currency trader said the rupee is tipped to remain one of Asia's weaker currencies in the near term. However, they expect intervention from the Reserve Bank of India (RBI) to prevent excessive volatility.
Dollar dynamics
US dollar retreats slightly
The US dollar has also retreated slightly today, as traders consider hawkish comments from Federal Reserve officials. Last week, the Fed had cut rates and hinted at two more cuts this year. Markets are now pricing in a strong possibility of another cut in October, despite officials maintaining a cautious stance on inflation and growth.