Rupee Hits All-Time Low Of 88.36 Against US Dollar; Likely RBI Intervention Caps Losses

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Posted by AI on 2025-09-05 10:57:39 | Last Updated by AI on 2025-09-07 16:34:56

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The Indian rupee fell to an all-time low of 88.36 against the US dollar, surpassing its previous low of 88.33 recorded in September 2022. This comes as global markets continue to worry about the war in Ukraine and the Fed's hawkish stance on interest rates. However, the rupee's losses were capped by likely Reserve Bank of India (RBI) intervention, as the central bank has been active in the currency market to manage the exchange rate.

The record low rupee value adds to the woes of Indian investors, as the currency has declined over 7% since the beginning of the year. This contrasts with other emerging market currencies, which have strengthened in the latter part of 2022. The RBI has maintained a cautious stance, prioritizing inflation fighting and fiscal stability over boosting growth.

Despite the RBI's efforts, the rupee's decline is a significant concern for the Indian economy. A weakening local currency can lead to higher import costs for essential items, such as crude oil, commodities, and manufactured goods. Moreover, it can dampen export competitiveness and attract speculative bets against the currency.

The recent fall in the rupee's value has sparked debates over the effectiveness of the RBI's current fiscal policies and whether it will intervene further in the currency market. The government's decision will be crucial in the short term to address the impact on inflation and ensure stability.

The latest record low of the rupee against the US dollar highlights the ongoing challenges that the Indian economy and the RBI's mandate are facing. Despite the RBI's efforts to manage the currency's decline, it will be interesting to see how the dynamics play out with war and conflict continuing to stain the global economic backdrop.

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