The Indian rupee extended its losing streak as global financial markets reacted to rising geopolitical tensions and volatility in crude oil prices. Forex traders said strong demand for the US dollar from importers and foreign fund outflows further pressured the local currency.
In the previous trading session, the rupee had already plunged 50 paise before slipping another 16 paise on Wednesday to settle at 96.86 per dollar — the weakest closing level ever recorded for the Indian currency.
Analysts believe that a strengthening US dollar index and uncertainty in global trade conditions have contributed significantly to the rupee’s decline. Investors are also closely monitoring the response of the Reserve Bank of India amid expectations of possible intervention to stabilize the currency.
Impact on Economy
A weaker rupee may increase the cost of imports such as crude oil, electronics, and industrial goods, potentially pushing inflation higher. However, exporters in sectors like IT and pharmaceuticals could benefit from improved overseas earnings.
Market experts warned that continued depreciation could impact consumer prices and corporate margins if the trend persists over the coming weeks.