FX.co ★ Indian Rupee Hits Fresh Record Low

The Indian rupee has depreciated beyond 90 per USD, reaching a new all-time low. This decline is driven by corporate dollar outflows, amplifying worries about the lack of a comprehensive trade agreement between the US and India. These outflows result from Indian firms purchasing US dollars for year-end international transactions, coupled with demand from both foreign and local private banks, likely associated with merchant dealings. This situation has overshadowed the slight respite offered by a weakening US dollar following the Federal Reserve's reduction in interest rates and unexpectedly moderate statements. On the trade front, Indian Commerce Secretary Rajesh Agrawal engaged in two days of discussions with US Deputy Trade Representative Rick Switzer in New Delhi, aiming to alleviate trade tensions, particularly concerning tariffs related to Russian oil imports. Nevertheless, experts caution that the rupee's depreciation might worsen if a trade deal does not come to fruition. The currency is heading towards its most significant annual decline since last year, driven by weak investment inflows and substantial US tariffs on Indian goods.