The Indian rupee has slipped to a record low against the US dollar, due to ongoing trade tensions between the US and India, as well as foreign investors selling Indian stocks and bonds. The rupee weakened by 0.2% to 90.6475 against the US dollar, surpassing its previous all-time low.
The rupee has declined by 5.5% against the dollar so far this year, mainly because of high US tariffs on Indian goods, which have hurt exports and made Indian stocks less appealing to foreign investors. Overseas investors have net sold over $18 billion in Indian stocks and $500 million in bonds in December alone.
The US-India trade negotiations have been stalled, and India's chief economic advisor has said that a trade deal is unlikely before March. This has led to a negative sentiment in the market, with foreign investors continuously selling Indian stocks and bonds. The Indian stock market, including the BSE Sensex and Nifty 50, has also been affected, with both indexes down by 0.4%.
The dollar index has fallen by 1.1% this month, but the rupee has not been able to benefit from this due to the negative trade sentiment. According to IFA Global, a forex advisory firm, the rupee is likely to continue underperforming in the medium term, with a predicted range of 89.60-90.60 over the next six weeks.
As the rupee continues to face challenges, it's essential to keep an eye on these key factors and market trends to understand the future direction of the Indian currency.
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