Rupee Hits Two-Week Low Against the Dollar

The Indian rupee experienced a significant decline, dropping to a two-week low against the US dollar, closing at 86.27 on Tuesday. This marks a decrease from 85.84 on Monday, with a total fall of 103 paise over two sessions.

Factors Behind the Rupee's Decline

Bankers attributed the rupee's fall to increased corporate demand for the dollar and the end of year-end dollar supply boosts. KN Dey, a forex consultant, highlighted the impact of the dollar index's recovery and the sharp depreciation of the Chinese yuan as key factors.

Impact of Yuan Depreciation

The weakening yuan, seen as China's response to US tariffs, has put pressure on Asian currencies, including the rupee. The Chinese yuan fell to 7.33 against the dollar, its weakest since September 2023, affecting regional currency stability.

Market Reactions and Future Outlook

Despite the rupee's decline, experts doubt it will reach its all-time low of 87.95. However, geopolitical crises could change this outlook. The RBI's ability to intervene in the forex market may be limited by current volatility.