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As at 14:34 IST, the rupee was down 6 paise from its opening level of 85.77, falling to 85.83. The RBI, which has intervened several times over the last 10 days, has been active in defending the rupee around the 85.80 level as the currency’s depreciation accelerated in December. On Monday, the Reserve Bank of India (RBI) directed State-run banks to sell dollars in the market, a move traders believe was aimed at curbing the rupee’s depreciation. This intervention helped limit the currency’s decline, with the rupee quoted at 85.81 at 10:15 a.m. IST.
Despite the intervention, analysts believe the rupee could continue to face volatility, with the currency exhibiting sharp episodic depreciations followed by periods of relative stability. The recent change in leadership at the RBI, following the appointment of Sanjay Malhotra as governor, has sparked speculation about a potential shift in the central bank’s approach to managing the rupee. Some analysts suggest that the RBI could allow for greater flexibility in the currency’s movements, accepting short-term volatility in favour of longer-term stability.
Barclays believes the rupee will not face a sudden drop in its value anytime soon. By the end of the year 2025, the brokerage firm forecasts the USD/INR pair to hit 87 as it closely monitors the incoming Trump-led administration’s policies closely for a review of its target.
Globally, Asian currencies were mixed on Monday, while the dollar index remained steady at 108.9, hovering near its highest levels in two years. Traders are awaiting key U.S. economic data this week, including the minutes of the Federal Reserve’s December policy meeting on Wednesday and the U.S. non-farm payrolls report on Friday. These releases are expected to influence expectations on future U.S. interest rate hikes, which could further impact the rupee and other currencies globally.
First Published: Jan 6, 2025 2:41 PM IST
