The Indian rupee was mostly unchanged today and trade closed at Rs 84.90 against the US dollar. This was a strengthening of 1 paisa from its previous all-time low of 84.91 on Monday.The marginal uptick came despite a weakening economic outlook, a widening trade deficit, and weak domestic markets weighing on investor sentiment.
At the interbank foreign exchange market, the rupee opened at 84.89 and reached an all-time low of 84.93 during intra-day trade, before recovering slightly by the close.
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Outlook for the Rupee
Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities said,”The rupee traded flat near 84.90 as markets remain focused on the FED’s final policy decision of the year scheduled for December 18, 2024. While a 0.25bps rate cut has already been factored in, forward commentary and projections will be key. A dovish tone could push the dollar index lower, providing relief for the rupee.”
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He added,” However, any uncertain or hawkish remarks may strengthen the dollar and keep participants bearish on the rupee. The rupee’s range is anticipated between 84.75 and 85.05.”
Economic Concerns and Trade Deficit Impact
The pressure on the rupee was compounded by the release of disappointing trade balance data for November. India’s exports contracted by 4.85 per cent year-on-year to $32.11 billion, while the country’s trade deficit expanded to a record high of $37.84 billion. The deficit was primarily driven by a sharp surge in gold imports, which hit a record $14.86 billion, reflecting the strong demand during the festival and wedding season.
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US Dollar and Global Market Trends
The US dollar continued to strengthen globally,
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