U.S. Dollar Maintains Dominance as Indian Rupee Hits Historic Low
10.12.2024 20:30 2 min. read Kosta Gushterov
The U.S. dollar’s strength in the global financial landscape remains unshaken, as it continues to outperform other currencies, including the Indian rupee.
Recently, the DXY index, which monitors the performance of the dollar against a basket of currencies, has surpassed the 106 mark, reinforcing the dollar’s dominance. This ongoing strength has been making local currencies falter, with many suffering significant losses.
On Tuesday, the Indian rupee hit a historic low of 84.87 against the U.S. dollar, marking a new milestone in its downward trajectory. The rupee has been under pressure for months, especially since November, as the dollar and other U.S. assets, such as stocks and cryptocurrency, surged, benefiting from renewed optimism surrounding President Trump’s economic policies.
As Trump prepares for another term, market participants are hopeful that his policies will steer the U.S. economy toward further growth. However, this optimism could come at the expense of other currencies, particularly the Indian rupee, which may struggle to regain strength. The rupee’s ongoing decline could see it dip even further, potentially breaking the 85 mark before the end of January 2025.
The pressure on the rupee is compounded by the significant outflows from foreign institutional investors, who have recently sold off nearly $12 billion worth of Indian equities. This has added further strain to the already weak currency. Now, it’s up to Shaktikanta Das, the Governor of the Reserve Bank of India, to determine how to respond to this crisis. His decisions in the coming months will be critical in shaping the rupee’s future, especially in the face of the U.S. dollar’s ongoing dominance.
For now, unless the RBI introduces new measures to support the rupee, it’s likely that the dollar will continue its reign, leaving other currencies, including the rupee, vulnerable to further declines.
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