Rupee to fall big two-year, could soon reach below 86; dollar index at 24-month top
New Delhi| The dollar index has continued to strengthen against other major world currencies since Donald Trump was elected president of the U.S. and has reached a high of more than 24 months. Due to the strengthening of the dollar index, the trend of decline in the rupee continues, which is not showing any signs of stopping at the moment. It is estimated that the rupee may further fall to below 86 by the March quarter, 2025.
The Centre for Monitoring Indian Economy (CMIE) claims that the value of the Indian currency against the dollar will decline to an average of Rs 86.1 in the March quarter, 2025. This represents a 1.9 per cent decline against the December quarter, 2024 average value of Rs 84.5, the highest in two years. The rupee has not seen a decline of more than one percent in any quarter in the last two years. Even in the current financial year, the Indian currency has weakened every quarter and has already declined by 2.7 percent in 2024.
According to CMIE, the rupee fell 0.7 per cent in December alone. It has weakened rapidly in the last 10 days of last month. It took more than two months for the Indian currency to fall by one rupee. The rupee was valued at 84.06 against the dollar on 11 October, falling to 85.07 on 19 December. At, in 10 days it fell by 55 paise against the dollar to 85.26 by 31 December. The rupee fell 4 paise to a record low of 85.79 against the dollar on Friday. n The Indian currency has weakened by 1.4% against the dollar in the April-December period of the current financial year.
The Indian currency had taken 457 days to arrive from 83 to 84, while it had taken just 60 days to arrive from 84 to 85. The rupee had fallen below 85 for the first time on December 19, 2024, and in just 14 days it came close to 86. In such a situation, this will be the first time in recent times that the Indian currency will fall by one rupee in the shortest day.
The rupee had fallen by 10 per cent against the dollar in 2022 following Russia’s attack on Ukraine. It is a coincidence that the rupee fell 1.3 per cent against the dollar after Sanjay Malhotra took over as RBI governor. The strengthening of the dollar has also led to weakness in the euro and the British pound. The euro has fallen one percent against the U.S. currency, its low of more than two years since November, 2022. The British pound has also fallen 1.17 percent to a more than eight-month low.
