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On Monday, Amid a surge in the US bond profits and the US dollar index, the rupee unbolted 0.68 per cent lower to hit a renewed record low of 81.55 besides the greenback. Succeeding last week’s declaration by the UK Government on the tax cuts and investment incentives for boosting growth, the Sterling slumped as much as 4.9 per cent against the dollar to an all-time low of $1.0327.
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While the two-year US Treasury yield was at 4.2 per cent, its peak level since 12th October 2007, the dollar index, which measures the greenback against six major currencies, including the Sterling, the Euro, and the Yen, reached 114.58 for the first time since May 2002 before easing to 113.73. On Friday, the Indian rupee reached a record low of Rs 81.2250, stimulating the Reserve Bank of India (RBI) to sell the dollars, according to the reports. The RBI’s involvement had aided the rupee to turn momentarily higher on Friday.
“The rupee will remain under pressure as the dollar index may knowingly increase due to the US Fed’s obligation raises rates more aggressively in the upcoming months, leading the rupee to fall further to Rs 82 to 83.5 levels,” Mohit Nigam, Head – PMS, Hem Securities, said. In the other forex markets, the Australian dollar slipped to $0.6487, being the lowest since May 2020, and the Canadian dollar touched a fresh trough at C$1.3625 per greenback, its weakest since July 2020. Reuter’s data showed that China’s offshore Yuan fell to a new low of 7.1630 per dollar, which is the feeblest since May 2020.
On Monday, China’s Central Bank proclaimed steps to slow the Yuan’s recent devaluation pace by making it more luxurious to bet against the currency. In Japan, the central bank seeks an ultra-easy policy to recover a fragile economy; last week, authorities interfered in the currency market to buy the yen for the first time since 1998.
