Indian Rupee's Significant Drop Against the Dollar

On Monday, the Indian rupee experienced its most substantial single-day decline in two weeks, closing at 87.33 against the dollar, a drop of 46 paise from Friday's 86.87. This significant fall was influenced by dollar bids due to the maturity of non-deliverable forwards (NDF) positions and was further exacerbated by the weakness in the Chinese yuan.

Impact on Asian Currencies and Market Sentiment

Other Asian currencies also faced downturns, with losses ranging between 0.1% and 0.3%. The dollar index slightly increased to 103.7 after reaching a four-month low the previous week. Concerns over US tariffs and a decelerating economy have negatively affected investor sentiment. Among Asian currencies, only the Philippine peso saw gains, while others like the Indonesian rupiah, Singapore dollar, Malaysian ringgit, and Thai baht declined.

Factors Influencing the Rupee's Performance

The rupee encountered selling pressure, though dollar sales by two major private banks helped to mitigate some losses. Safe-haven currencies, including the Japanese yen and Swiss franc, gained as investors remained cautious about a slowing US economy and the potential for a global trade war. Despite a weaker US dollar, the rupee did not receive support, as a sell-off in domestic equities further weighed on market sentiment.

This year, the rupee has been the worst-performing currency in Asia, affected by portfolio outflows and global factors. Traders are now looking forward to US and Indian inflation data for future policy directions. Meanwhile, the dollar index decreased by 0.2% to 103.7, and Brent crude futures saw a 0.3% increase to $71 per barrel.