Rupee Plunges to Historic Low Against Dollar

The Indian rupee has reached an unprecedented low, trading at 86.40 against the US dollar. Experts anticipate further decline, with an 80% chance it will reach 87 by March's end. Contributing factors include rising treasury yields, crude oil prices, foreign investor withdrawals, and US economic policies.

The Indian rupee has reached a historic low against the US dollar, trading at 86.40 for the first time ever. Experts predict the currency could drop further to 87 by the end of March, according to volatility trends, which mark an 80% likelihood of continued depreciation.

Akshay Chinchalkar, Head of Research at Axis Securities, attributes this decline to rising treasury yields and increasing crude oil prices, factors that have negatively impacted the rupee's outlook. "The rupee has now fallen for 16 consecutive weeks, a streak unprecedented in history," Chinchalkar explained. Meanwhile, aggressive trading of dollar-rupee options in offshore markets indicates a continued bearish sentiment from investors.

However, market expert Ajay Bagga offers a differing perspective, indicating that the rupee's trajectory mirrors a broader trend affecting global currencies. He mentions that while 2024 saw the rupee outperform other emerging markets, 2025 is marked by further US economic strength leading to a global weakening of currencies, including India's.

Bagga also highlights the impact of US dollar exceptionalism and the competitive devaluation by emerging markets to maintain export competitiveness. Foreign Portfolio Investors (FPIs) withdrawing their funds from Indian markets have compounded the issue, putting additional stress on the rupee's value.

(With inputs from agencies.)