MUMBAI: The Indian rupee will likely hit a fresh all-time low at the open on Tuesday, following the offshore Chinese yuan’s dip past a key level to the lowest in over a year.
The 1-month non-deliverable forward indicated that the rupee would open at near 84.78 to the US dollar, dropping past the 84.7050 lifetime high hit on Monday.
The rupee on Monday had its worst day in six months, bogged down by India’s disappointing GDP data.
India’s September quarter GDP slumped to a multi-quarter low, which meant that the central bank would cut rates sooner than previously expected and that foreign equity outflows were likely to persist, undermining the rupee.
“There were fundamental factors in play (for rupee’s decline) yesterday. When that happens, it usually means a period of prolonged weakness,” a currency trader at a bank said.
“The Reserve Bank of India will pull out all stops to make sure that the decline is not disruptive,” he said, adding that the central bank sold dollars to help out the rupee on Monday.
Yuan extends losses
The offshore Chinese yuan slipped past the 7.30 level to the US dollar for the first time in over a year on Tuesday, hitting a low of 7.3148.
Other Asian currencies also dropped alongside the Chinese currency.
Indian rupee poised for all-time low on disappointing growth, drop in Asian peers
The risk of US tariffs following Donald Trump’s election victory has prompted investors to dump the yuan.
Since the US election results, the currency has declined by nearly 3%. The dollar, meanwhile, has staged a broad rally.
On Monday, the dollar benefited from data that indicated that US manufacturing activity contracted at a more moderate pace in November compared to the month prior.
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