Rupee Plunges to Record Low Against Dollar Amidst Trade Uncertainty

The Indian rupee fell beyond the 91-mark against the US dollar for the first time, influenced by FII outflows and uncertainties around the India-US trade deal. Forex experts predict it may cross the 92-mark, primarily due to trade disagreements and economic factors like inflation and debt selling.

In a significant turn of events, the Indian rupee plunged by 36 paise to breach the 91-mark against the US dollar during intra-day trade on Tuesday. This historic low was attributed to persistent foreign institutional investor (FII) outflows and unresolved issues surrounding the long-anticipated India-US trade deal.

The rupee's sharp decline from 90 to 91 against the dollar in just ten trading sessions highlights the mounting economic challenges. In fact, the local currency has depreciated by 1 percent in the past five sessions, with forex traders predicting it may soon cross the 92-mark.

Key economic factors, including a buy-sell swap, tax outflows, speculative buying, and exporters holding on to their dollars, have exacerbated the situation. Despite a drop in the trade deficit on Monday, the rupee continued its downward spiral. Meanwhile, wholesale price inflation remained negative for the second consecutive month, indicating persistent domestic economic pressures.

(With inputs from agencies.)