December 19, 2024: The Indian Rupee tumbled to a historic low on Thursday, breaching the Rs 85 mark against the US dollar for the first time ever. The currency fell to 85.0650 in early trade, marking a notable decline from the previous day’s closing of Rs 84.9525.
This sharp drop comes in the wake of the US Federal Reserve's decision to cut key interest rates by 25 basis points, signaling fewer rate cuts in 2025. The Fed’s move has placed additional pressure on the rupee, which had already been grappling with weak capital inflows and a challenging economic landscape.
The rupee’s depreciation has been accelerating in recent months. In just two months, the currency has dropped from Rs 84 to Rs 85, a stark contrast to the more gradual decline from Rs 83 to Rs 84, which took 14 months, and from Rs 82 to Rs 83, a period of 10 months.
The rupee's struggles are part of a broader trend in Asia, as other regional currencies also saw declines. The Korean won, Malaysian ringgit, and Indonesian rupiah each weakened by 0.8%-1.2% on Thursday, reflecting the ripple effect of the Fed’s policy changes.
The Federal Reserve’s updated "dot plot," which outlines its interest rate expectations, projects only two rate cuts for 2025—half of what had been anticipated in September. Fed Chair Jerome Powell's cautious remarks added to the uncertainty in global markets, noting that the central bank would now adopt a more careful approach to further rate reductions.
As the rupee continues its downward trajectory, experts are closely watching how the currency will fare amidst these global economic shifts and the Fed's evolving policy stance.
STORY HIGHLIGHTS
Rupee Plunges to Historic Low, Drops Below Rs 85 Against US Dollar
December 19, 2024: The Indian Rupee tumbled to a historic low on Thursday, breaching the Rs 85 mark against the US dollar for the first time ever. The currency fell to 85.0650 in early trade, marking a notable decline from the previous day’s closing of Rs 84.9525.
This sharp drop comes in the wake of the US Federal Reserve's decision to cut key interest rates by 25 basis points, signaling fewer rate cuts in 2025. The Fed’s move has placed additional pressure on the rupee, which had already been grappling with weak capital inflows and a challenging economic landscape.
The rupee’s depreciation has been accelerating in recent months. In just two months, the currency has dropped from Rs 84 to Rs 85, a stark contrast to the more gradual decline from Rs 83 to Rs 84, which took 14 months, and from Rs 82 to Rs 83, a period of 10 months.
The rupee's struggles are part of a broader trend in Asia, as other regional currencies also saw declines. The Korean won, Malaysian ringgit, and Indonesian rupiah each weakened by 0.8%-1.2% on Thursday, reflecting the ripple effect of the Fed’s policy changes.
The Federal Reserve’s updated "dot plot," which outlines its interest rate expectations, projects only two rate cuts for 2025—half of what had been anticipated in September. Fed Chair Jerome Powell's cautious remarks added to the uncertainty in global markets, noting that the central bank would now adopt a more careful approach to further rate reductions.
As the rupee continues its downward trajectory, experts are closely watching how the currency will fare amidst these global economic shifts and the Fed's evolving policy stance.