Rupee Slumps on Strong Demand to Buy Dollars at Daily Fix, Weak Yuan
The Indian rupee weakened on Monday due to strong demand to buy dollars at the daily reference rate and a decline in the Chinese yuan amid worries about its economy and global trade war. The rupee declined 0.4% to 87.26 against the U.S. dollar as of 9:45 a.m. IST, with the reference rate quoting at a 1/1.20 paisa premium. The dollar index ticked up to 103.8, recovering from a four-month low hit last week.
- This weakening of the rupee highlights the ongoing vulnerability of emerging markets to rising U.S. interest rates and a strengthening dollar, which can have significant implications for India's export competitiveness.
- Will the Indian government's response to this economic pressure, including potential monetary policy easing or fiscal reforms, be enough to mitigate the impact on growth and inflation?