Indian Rupee Hits Record Low Of 84.80 Amid New RBI Governor Appointment

The Indian rupee weakened to an all-time low of 84.80 against the US dollar in early trading on Tuesday, reflecting market concerns over upcoming monetary policy changes. This decline followed the government’s announcement on Monday that Sanjay Malhotra, the current revenue secretary to the finance ministry, will serve as the next Reserve Bank of India (RBI) governor starting December 11.

The rupee’s latest dip surpassed its previous record low of 84.7575, which occurred last week. This development also pushed the USD/INR pair to a record high of 84.86 in the Non-Deliverable Forward (NDF) markets, showcasing heightened volatility. The US dollar index, which gauges the dollar’s strength against a basket of major currencies, gained 0.06%, reaching 106.22.

Impact of New RBI Leadership

Sanjay Malhotra’s appointment has increased expectations of a shift towards more accommodative monetary policies under his tenure. Analysts at Nomura predict that a rate cut during the February monetary policy committee meeting is now “likely cemented.” This anticipation has added pressure on the rupee, as markets speculate about the potential impact on India’s economic trajectory.

To stabilize the currency, the Reserve Bank of India reportedly stepped in, with state-run banks engaging in dollar sales, according to Reuters. Despite these efforts, the rupee closed 5 paise lower at 84.73 against the dollar on Monday.

Expert Opinions on Rupee’s Future

Amit Pabari, Managing Director at CR Forex Advisors, provided insights into the rupee’s outlook. He noted that while the currency has potential for growth, global uncertainties continue to pose significant challenges.

“The currency is likely to trade within the 84.50 to 85.00 range, with a slight downward bias. Today’s US inflation data will be closely watched, as it is expected to influence market movement,” Pabari said.

The announcement of a new RBI governor has clearly shaken investor confidence, with markets reacting to the possibility of changes in India’s monetary stance. However, experts urge caution, advising investors to consult certified professionals before making financial decisions.

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