Strong US Dollar Impact: Indian Rupee Falls to Historic Low

According to the Zhitong Finance and Economics APP, the Indian Rupee has fallen to a historic low due to the strengthening of the US dollar, putting pressure on most Asian emerging market currencies. Data shows that on Thursday, the Indian Rupee fell 0.3% against the US dollar to 83.67, surpassing the previous low of 83.5750 reached in April.

With the Swiss National Bank announcing a rate cut and the US dollar strengthening, it highlights the divergence in monetary policies among global central banks at a time when the Federal Reserve delays its easing policies. In India, despite interventions by the central bank to curb sharp exchange rate fluctuations, it has not prevented the continued depreciation of the Indian Rupee. The Indian Rupee remains the best-performing currency in Asia this year, second only to the Hong Kong Dollar.

David Forrester, Senior Strategist at Credit Agricole CIB in Singapore, said, "The US dollar currently dominates the market, which is why the Indian Rupee has fallen to a historic low."

The Reserve Bank of India has kept the Indian Rupee within a narrow range while focusing on increasing its foreign exchange reserves to record highs to defend the Rupee's exchange rate. This has made the Rupee one of the least volatile currencies in emerging markets, and with continued inflows of foreign capital into Indian bonds before their inclusion in the Morgan Stanley index, it is expected that the Reserve Bank of India will continue to accumulate foreign exchange reserves.

Shaun Lim, Currency Strategist at Malayan Banking, said, "As the market realizes the inclination of the Reserve Bank of India, the weakness of the Rupee is unlikely to persist. They prefer a stable Indian Rupee, and they have the means to achieve this."