Mumbai: The Rupee Hits a New Low

The Indian rupee closed at a new low of 84.86 against the US dollar, dropping nearly seven paise from its previous close of 84.79. Despite hitting an intraday low of 84.88 on Thursday, a recovery in the equity markets on Friday provided some respite.

Global Factors at Play

The rupee's weakening on Monday was largely influenced by global cues, including a weaker Chinese Yuan and rising US bond yields. A weaker Yuan exerts trade pressure on the rupee, while rising bond yields reverse capital flows from emerging markets to the US.

China's Economic Impact

The Chinese Yuan faced pressure following a drop in retail sales, compounded by the Chinese Central Bank's indication of further cash reserve requirements, potentially pressuring the exchange rate. Meanwhile, the dollar index remained steady at 106.88, with market participants awaiting the US Federal Reserve's interest rate decision on Wednesday.

Domestic Currency Performance

Despite recent depreciation, the domestic currency outperformed several of its Asian peers, according to the government's response to a parliament query last week.