Muscat: The Indian Rupee has reached an unprecedented low against the US dollar, closing at INR 84.8525, marking a historic milestone.
Following the regular trading hours yesterday, the Non Deliverable Forward Market (NDF) hit the 85 mark. In Oman, exchange houses are currently offering INR 220 for one Omani rial.
In an interview with Times of Oman, Madhusoodanan, Executive Advisor to the Board of Global Money Exchange, stated, “The decline is primarily due to domestic factors rather than international ones. Key contributors include fresh outflows of foreign funds, increased dollar demand from banks, anticipated changes in monetary policy, potential interest rate cuts, and indications of a slowdown in the Indian economy.” The recent appointment of Sanjay Malhotra as Revenue Secretary, replacing the current Governor Shaktikanta Das, has heightened expectations for a shift in the Reserve Bank of India's accommodative monetary stance. Earlier in January 2024, the INR was valued at INR 82.86 against the USD, but it has now surpassed 84.85. The Reserve Bank of India has been actively intervening in the foreign exchange market to limit the depreciation of the rupee. The country’s foreign exchange reserves, which stood at over $704.9 billion at the end of September, have decreased to $657 billion as of November 22, 2024. On the global stage, factors such as a robust dollar index (106.14), ongoing tensions in the Middle East and with Syria, as well as indications of significant policy shifts by the Chinese government to bolster its economy, are also influencing the situation.
Madhusoodanan stated that the Indian government finds the GDP growth of 5.4% reported for the September 2024 quarter to be unsatisfactory, as it falls short of the Reserve Bank of India's expectation of 7%. This shortfall is primarily attributed to a slowdown in industrial activity, which has also raised concerns among investors. Consequently, Sanjay Malhotra, the new Governor, will face the challenge of balancing growth and inflation. Additionally, managing the volatility of the Indian Rupee will be a significant hurdle, especially since there are no straightforward solutions available to him.
