Indian Rupee Hits 90 Against Dollar for First Time Amid Economic Concerns

The Indian Rupee has experienced a significant decline, breaching the 90 mark against the US Dollar for the first time in history, reaching a low of 90.29. This milestone has sparked a discussion among economists and financial experts regarding its implications for the Indian economy.

Market analysts attribute the rupee's depreciation to a combination of factors, including a strong demand for the US Dollar, outflows of foreign investment, and rising crude oil prices. According to a report from the Press Trust of India, the currency opened at 89.96 and struggled throughout the trading session before settling at 90.21, marking a drop of 25 paise from the previous close.

Anuj Choudhary, a research analyst at Mirae Asset ShareKhan, commented on the situation, stating, "The rupee hit a fresh all-time low of 90.30 amid selling pressure from foreign investors and a surge in crude oil prices. Uncertainty over the announcement of the India-US trade deal has also weighed on the rupee. However, a weak US dollar index prevented a sharp fall."

The Reserve Bank of India (RBI) has been under scrutiny for its perceived lack of intervention in stabilising the currency. Some analysts noted that the RBI allowed the rupee to cross the 90 threshold before stepping in to support it. Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, remarked, "The rupee was easily allowed by the RBI to cross 90, and it even fell to 90.30 before the RBI stepped in."

The ongoing fall of the rupee has raised concerns, particularly among exporters and importers. While some experts argue that a weaker rupee could enhance export competitiveness, others express worries about the rapid decline in value, which they describe as the "fastest decline in the value of the rupee ever."

Economists point to a collapse in Foreign Direct Investment (FDI) and the absence of a significant trade deal as critical factors contributing to the rupee's downturn. The lack of clarity regarding the India-US trade negotiations has added to the uncertainty in the market.

Despite the challenges, there are mixed signals in the broader economic landscape. The seasonally adjusted HSBC India Services PMI Business Activity Index rose to 59.8 in November from 58.9 in October, reflecting growth in the services sector supported by new business opportunities.

The rupee's depreciation raises questions about the future trajectory of the Indian economy, particularly as it navigates complex global dynamics. Experts are closely monitoring the situation, considering whether this depreciation is a necessary adjustment or a symptom of deeper economic issues. As the currency continues to experience fluctuations, stakeholders remain cautious and vigilant in assessing its impact on various sectors of the economy.