Indian rupee hits 2-week low against US dollar
What's the story
The Indian rupee has hit a two-week low against the US dollar, closing at 86.9850 today. This is a decline of 0.2% from its previous close of 85.80 on Friday. The currency even hit an intra-day low of 86.0475, its weakest since June 25, according to traders' reports and market data analysis.
Market pressures
Rupee's fall attributed to corporate dollar demand
The rupee's fall is largely attributed to corporate dollar demand from a major Indian conglomerate and other companies. These factors have put pressure on the currency, along with possible outflows from Indian equities. India's benchmark equity indexes, Sensex and Nifty 50, also fell by 0.3% today despite most regional peers gaining ground during the same period.
Trade tensions
Uncertainty over US trade policies adds to decline
Uncertainty over US trade policies has also contributed to the rupee's decline. President Donald Trump recently threatened a 30% tariff on European imports, further escalating his ongoing trade war. This move led to a decline in European stocks and a slight dip in the common currency against the dollar. Despite these developments, ING noted that investors view such threats as negotiating tactics by Washington to secure deals with other countries.
Market outlook
Chances of rupee gaining ground remain limited
Amit Pabari, the Managing Director at FX advisory firm CR Forex, has said that the chances of the rupee gaining ground remain limited. He expects resistance around the 85.40-85.50 level for the currency.