The Indian rupee declined against the U.S. dollar on Monday as strong demand for greenbacks during the daily currency fix overshadowed the impact of a weak yuan. Traders noted that multiple factors, including geopolitical uncertainties and shifts in global economic policies, contributed to the heightened demand for the dollar. Market participants rushed to buy dollars amid concerns over a weak yuan resulting from recent economic data out of China.
“Strong dollar demand at the daily fix and a depreciating yuan are putting significant pressure on the rupee,” commented a foreign exchange analyst in Mumbai. The decline in the rupee was observed despite intervention efforts from the Reserve Bank of India (RBI), which aimed to stabilize the currency by selling dollars in the open market.
Rupee pressures due to dollar demand
In New Delhi, currency exchange stalls witnessed brisk business as individuals sought to exchange rupees for dollars, anticipating further depreciation. “We have seen an increased volume of transactions as people are looking to hedge against the falling rupee,” said a local currency broker. The broader context also includes the Bank for International Settlements’ recent commentary on global markets.
The Bank noted a shift in focus from rising debt to military expenditure increases, as European nations respond to changing U.S. security policies. As the rupee continues to face downward pressure, market watchers are closely monitoring RBI’s potential next steps and any further movements in the yuan that could impact the Indian currency.
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