Rupee Under Pressure: The Start of an Exciting Week in the Currency Market

The Indian rupee faces a challenging market situation at the start of the week after breaching a critical threshold on Friday. With support from a strengthened US dollar, the opening rate of the one-month non-deliverable forward contracts is displaying a value near 84.08—an increase compared to the previous day's value of 84.06 and the prior record of 84.07. On the last trading day of the week, the local currency dropped below the 84 mark for the first time, a level that had been defended by the Reserve Bank of India (RBI) for over two months. A leading currency trader expressed concern over this recent development and emphasized the importance of the upcoming week for market assessment. The trader speculates that the RBI might allow the dollar-rupee rate to gradually rise further, but without allowing exaggerated expectations of a sudden surge. The US Dollar Index, trading above 103 at the beginning of the week, has benefited from recent disappointing economic measures in China and has been supported by the anticipated rate cut by the Federal Reserve next month. Another factor explaining the rupee's weakness is the outflow of foreign funds from Indian stocks, which has played a significant role in the recent decline beyond the 84 mark. However, there is also hope: Hyundai India's notable IPO, valued over $3.3 billion, could provide the rupee with some respite.