Rupee hits record low as appointment of new RBI Governor spurs repo rate cut bets
- Rupee hit a record low of 84.80 in early trading, surpassing its previous all-time low of 84.7575 hit last week.
Indian rupee weakened to a record low on Tuesday as the appointment of the new Reserve Bank of India (RBI) Governor increased expectations of interest rate cuts next year. The local currency hit a record low of 84.80 in early trading, surpassing its previous all-time low of 84.7575 hit last week.
The US dollar index, which measures the currency against the euro, sterling, yen and three other major peers, gained 0.06% to 106.22.
The government on Monday named career civil servant Sanjay Malhotra as the next governor of the RBI. Malhotra, currently serving as the revenue secretary to the finance ministry, has been appointed as the RBI governor for a three-year term starting December 11.
The announcement of the leadership change had triggered a notable reaction in the currency markets, with the USD/INR pair surging to a record high of 84.86 in the Non-Deliverable Forward (NDF) markets earlier.
On Monday, the rupee closed 5 paise lower at 84.73 a dollar.
The RBI likely stepped in to support the rupee, with traders pointing to dollar sales by state-run banks, Reuters reported.
Analysts at Nomura expect a shift towards accommodative monetary policy is among the potential changes that could occur under the new governor.
A rate cut at the RBI's February monetary policy committee meeting is "now likely cemented", Nomura said.
Rupee Outlook
According to Amit Pabari, MD, CR Forex Advisors, while the rupee’s outlook leans towards growth, global uncertainties remain a key concern.
“The currency is likely to trade within the 84.50 to 85.00 range, with a slight downward bias. Today's US inflation data will be closely watched, as it is expected to influence market movement,” Pabari said.
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