The Indian rupee fell to an all-time low against the UAE dirham on Thursday, pressured by foreign outflows and a stronger US dollar. The currency dropped to 23.0047 per UAE dirham (84.4275 per US dollar) in early trade, breaking its previous record of 23.0027. By 9 a.m. UAE time, it was trading at 23.0020, showing little change for the day.
Reserve Bank of India Steps In
The Reserve Bank of India (RBI) intervened to limit the rupee’s losses. Traders reported state-run banks selling dollars, providing some support to the Indian currency. However, ongoing challenges continue to weigh heavily on the rupee.
Stock Market Pressures Indian Rupee
India’s benchmark equity indexes, the BSE Sensex and Nifty 50, each declined by 0.7%. The drop was largely attributed to steep losses in Adani Group shares. The group’s chairman, Gautam Adani, faces bribery and fraud charges in New York, triggering a sharp sell-off in its listed entities.
Shares of Adani Enterprises plunged 20%, while Adani Green Energy tumbled 18%. The fallout further dampened investor sentiment, adding pressure to the rupee.
Dollar Strength and Federal Reserve Policies
The US dollar regained strength, reversing a three-day losing streak, and weighed heavily on the rupee. The dollar index rose to 106.5 after gaining 0.4% on Wednesday. While most Asian currencies traded within a narrow range, the rupee remained vulnerable.
Hawkish comments from Federal Reserve officials lowered expectations for aggressive rate cuts. Fed Governor Michelle Bowman stated that cutting rates would be unwise while inflation stays above target. Consequently, market odds for a December rate cut dropped to 52% from 82% a week ago, according to CME’s FedWatch tool.
Market participants are also closely monitoring geopolitical risks. DBS Bank highlighted escalating tensions in the Ukraine-Russia war, warning of potential economic disruptions. These global uncertainties, combined with domestic market pressures, continue to challenge the Indian rupee’s stability.
