Indian rupee continued its decline against U.S. dollar started more than a 10 days ago. Fueled by the demand for foreign oil, dollar buying weakens rupee as the interbank Forex traders massively sell rupees.
Rupee is falling since November 14, when the carry trade slump started to affect Indian economy. With higher global volatility investors decreased their appetites for the risky Indian equities and thus the Indian rupee too. Today USD/INR rate reached 39.88 compared to yesterday’s 39.79 close on Forex.
Intervention of $52 billion in rupees by Reserve Bank of India on November 24 was also a sign that India doesn’t want a strong dollar, but would prefer a weaker rupee. So, the traders now have three reasons to sell rupee: higher demand for expensive oil, lower demand for Indian stocks, intervention by central bank.
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