Indian rupee plunges to lifetime low of 84.80 against USD
What's the story
The Indian rupee plunged sharply on December 10, hitting an all-time low of 84.80 against the US dollar. This beats the previous record low of 84.7575 set only last week. The fall was prompted by heightened expectations of domestic rate cuts in 2025 after Sanjay Malhotra was appointed the new governor of the Reserve Bank of India (RBI).
Intervention
RBI intervenes to support falling rupee
In a bid to curb the rupee's fall, the RBI reportedly intervened by selling US dollars through PSU banks and state-run banks. The move was aimed at supporting the weakening currency. Meanwhile, the US dollar index, which compares the currency against six major peers including the euro and yen, saw a slight increase of 0.06% to 106.22.
Leadership
New RBI governor's term begins amid economic challenges
Malhotra, who is currently the revenue secretary to the finance ministry, will take over as RBI governor on December 11 for a three-year term. His term begins at a time when India's economic growth has slowed down and inflation continues to remain high. These factors make the outlook for monetary policy complicated. Nomura analysts predict Malhotra's appointment could lead to a shift toward accommodative monetary policy.
Rate cut
Market experts predict rate cut in RBI's February meeting
Nomura analysts believe a rate cut at RBI's February monetary policy committee meeting is "now likely cemented" with Malhotra's appointment. RBL Bank's head of treasury Anshul Chandak said they expect a tilt toward supporting growth under Malhotra's leadership. However, CR Forex Advisors's Amit Pabari cautioned global uncertainties remain a key concern for the currency's outlook.