Indian Rupee Hits Record Low Amid Economic Slowdown

The Indian rupee experienced a record low on Monday, driven by concerns over a slowing economy after GDP growth reached its lowest level in seven quarters. Broad declines in other regional currencies further intensified the pressure on the domestic currency.

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During early trading, the rupee weakened to ₹84.6075 per U.S. dollar, surpassing its prior all-time low of ₹84.5075. By 9:45 a.m. IST, it had slightly improved to ₹84.6025, down 0.1%, as interventions by the Reserve Bank of India (RBI), likely through dollar sales by state-run banks, seemed to limit deeper losses.

India’s economic growth in the third quarter fell significantly below expectations, potentially prompting the RBI to consider interest rate cuts. Such measures could exacerbate challenges for the rupee, which is already under pressure from a strengthening dollar and ongoing capital outflows from the equity market.

Foreign investors withdrew approximately $2.5 billion from Indian equities in November, following $11 billion in October. Analysts predict that the weak economic data may trigger additional stock outflows, further straining the rupee.

Indian stock benchmarks, including the BSE Sensex (.BSESN) and the Nifty 50 (.NSEI), registered a decline of about 0.1% each.

Michael Wan, a senior currency analyst at MUFG Bank, noted in a report, “From a rates perspective, the upcoming RBI December meeting is likely to see close deliberations, with potential dissent from some external members of the Monetary Policy Committee (MPC).”

Other Asian currencies also saw declines of 0.2% to 0.6% as the U.S. dollar strengthened. This followed a statement from U.S. President-elect Donald Trump urging BRICS nations not to develop or endorse alternative currencies to the dollar, with a threat of 100% tariffs for non-compliance.

Routine RBI interventions to stabilize the rupee have taken a toll on India’s foreign exchange reserves, which dropped to a five-month low of $656.6 billion as of November 22. Over the past seven weeks, reserves have fallen by $47 billion.

HDFC Securities anticipates the rupee trading within a range of ₹84.35-84.94 per U.S. dollar. Meanwhile, Kedia Commodities and Emirates NBD predict the rupee could soon weaken further to ₹85 per dollar. Motilal Oswal offers an even more bearish outlook, projecting a decline to ₹85.50 per dollar.