Rupee hit an all-time low on Wednesday, November 6, pressured by early results from the US presidential election that strengthened the dollar and weighed on Asian currencies.
The rupee slid to 84.1725 against the US dollar, marking a 0.07% decline from its previous close of 84.1075. It was last seen trading at 84.17. A Reuters report said the dollar index climbed nearly 1.5% to a four-month high of 104.9, while Asian currencies declined by as much as 1.2%.
Early trends from the US election results showed a lead for the Republican candidate Donald Trump, who is widely expected to launch protectionist tariffs and policies if he returns to the White House.
The strength in the dollar is not just squeezing the rupee. Other emerging market currencies are also facing pressure.
The rupee has been one of the safest emerging market currencies this year so far.
The Reserve Bank of India (RBI) has reportedly spent over $10.8 billion from the world’s fourth-largest reserves to defend the currency from election-related volatility.
India has the biggest foreign exchange reserves in Asia after China.
If the US election results in a win for Donald Trump, the market expects a return to protectionism in the world’s largest economy, and it could have a wider impact on all emerging markets, which rely on export revenue from America.
“If they follow through with higher tariffs across the board, and we see continued strength in the dollar, then obviously it is weakness for emerging market currencies. But again, I’m saying that the Indian rupee is very well managed and we may not see the same level of weakness in the rupee as we see in some of the other EM currencies,” Neeraj Gambhir, Head of Markets at Axis Bank, told CNBC-TV18.
The rupee had hit its lowest exchange rate of 84.13 against the US dollar on November 5 before recovering slightly by close. Continued strength in the greenback could push the Indian rupee lower to a new record low today.
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