Strong US dollar pressures Indian rupee to hit record low for three consecutive trading days.

Due to the increasingly strong US dollar bringing pressure of currency devaluation and the demand for US dollars by importers at the end of the month, the Indian Rupee exchange rate continued to weaken on Thursday, hitting a new low for the third consecutive trading day. On Thursday, the Indian Rupee closed at 85.2625 against the US dollar, compared to 85.20 on the previous trading day. During trading, the US dollar against the Indian Rupee touched 85.2825, indicating a depreciation of the Rupee to its historical low. "Importers have been quite active in foreign exchange transactions, and as the year-end approaches, the trading volume in the foreign exchange market is relatively low," said a trader from a private Indian bank. The Indian Rupee exchange rate (US dollar to Indian Rupee) depreciated from 84 Rupees to 85 Rupees in just two months, while it took nearly 14 months to drop from 83 to 84. Since mid-October when the Indian Rupee broke the 84 mark, the Rupee exchange rate has been gradually declining, mainly due to market concerns about the slowing Indian economy, accelerated outflow of foreign funds, and the impact of the trade policies of US President-elect Donald Trump adding tariffs and the hawkish sentiment of the Federal Reserve leading global funds to flow towards the US dollar and US stocks. During the period of Rupee depreciation, the continuous intervention by the Reserve Bank of India has to some extent restrained the accelerated depreciation trend of the Rupee, forcing the depreciation rate to slow down but not preventing the Rupee from moving towards a devaluation trajectory. Under the repeated large-scale interventions by the Reserve Bank of India, although the Rupee against the US dollar has depreciated significantly, the real effective exchange rate of the Indian Rupee (i.e., the value of the Rupee relative to various mainstream foreign currencies adjusted for inflation) reached a multi-year high of 108.14 in November. Anil Bansal, Chief Financial Officer at Finrex Treasury Advisors, said, "This means that the Rupee is still overvalued, so the possibility of any significant appreciation can be ruled out." "Therefore, any downward trend in the US dollar to Indian Rupee exchange rate is an important opportunity for buying on dips, and it is expected that the Rupee against the US dollar will continue to remain weak," Bansal said. The US dollar has significantly appreciated against major global currencies and Asian currencies since November, benefiting from the rising US Treasury yields and the significantly reduced market expectations for a rate cut by the Federal Reserve next year. The Federal Reserve policymakers communicated earlier this month with the markets through the "dot plot" to manage market expectations of a rate cut, indicating that the number of rate cuts that the Federal Reserve will implement in 2025 will be fewer than the 4-6 rate cuts predicted by the interest rate futures market, showing that the Federal Reserve may only cut rates twice in 2025.