‘Slight decline in rupee in October compared to other currencies’, Bank of Baroda report comments
New Delhi| A report by Bank of Baroda states that there has been a slight decline in the Indian rupee in October, while other major currencies have seen a huge decline. The report also pointed out that although the rupee has reached its all-time low of 84.09 per dollar, it remains a slight decline against the month-long significant rise of 3.2 per cent in the US dollar.
The rupee traded between 83.82 and 84.09 per dollar during October. It said that “the rupee depreciated by 0.3 per cent in October 2024 (up 0.1 per cent in September 2024) and it also reached its all-time low of 84.09/USD”. However, this decline was only marginal compared to the huge decline in other major currencies
The report also states that the US dollar has strengthened rapidly, mainly due to increasing uncertainties regarding the upcoming US presidential election and less possibility of interest rate cuts from the Federal Reserve. Many currencies suffered huge losses in this environment. The New Zealand dollar, Brazilian real, Japanese yen, Australian dollar and Thai bard all recorded significant declines.
For example, Japan’s yen hit a three-month low, marred by political uncertainty within the country. According to the report, “The currencies that suffered the most were the New Zealand dollar, Brazilian real, Japanese yen, Australian dollar and Thai baht”. Besides strengthening the USD, JPY touched its 3-month low due to domestic political uncertainty
The report highlighted that, India’s markets witnessed equity outflows from foreign portfolio investors (FPIs) due to a sharp decline in stock indices. The reduction in the interest rate differential between American and Indian 10-year bonds also led to selling from the debt segment, which made Indian debt less attractive to foreign investors.
According to the report, further pressure on the rupee is expected to continue, with it projected to remain in the range of 83.9 to 84.2 per dollar in the coming fortnight. “We expect the rupee to remain under pressure, but it will remain within a limited range”, the report said. Geopolitical developments (US elections, tensions in the Middle East) and domestic inflation trajectories will be closely monitored”
The report said geopolitical factors, especially developments related to the US elections and ongoing tensions in the Middle East, as well as domestic inflation trends will prove important in determining the direction of the rupee in the near future.
