The Indian Rupee has fallen below the 84 per USD mark for the first time, pressured by foreign capital outflows from Indian equity and debt markets and a shift in the Reserve Bank of India's (RBI, Financial) monetary policy stance. The Rupee weakened to 84.064 per USD, briefly reaching an all-time low of 84.0975 per USD.
Data indicates a withdrawal of $5.7 billion by foreign investors from Indian equities and $125 million from debts this month. Concurrently, the newly-formed Monetary Policy Committee of the RBI voted 5-1 to keep the benchmark repo rate unchanged at 6.5%, aligning with market expectations. The Committee's stance shifted to "neutral," suggesting potential rate cuts in the future.
Kunal Sodhani, Vice President at Shinhan Bank India, noted significant capital outflows, particularly from the stock market. He emphasized the importance of closely monitoring RBI's interventions after the Rupee breached the 84 per USD level.
Despite the steady depreciation of the Rupee this year, it has remained within a narrow range due to RBI's focus on monetary stability. Michael Wan, a senior forex analyst at MUFG Bank, stated that as long as volatility remains modest, the RBI can maintain some foreign exchange competitiveness relative to other currencies.
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