The Indian Rupee (INR) has recently reached an all-time low of ₹84.40 against the US dollar on November 11, 2024, primarily driven by persistent foreign fund outflows and a strengthening dollar [68783c85]. A report from the State Bank of India (SBI) suggests that the rupee may depreciate by an additional 8-10% during the anticipated Trump 2.0 administration, echoing concerns from the previous Trump term when the rupee depreciated by 11% [13a508da].
This decline is compounded by rising domestic inflation, which hit a 14-month high of 6.21% in October, and the dollar index trading at 105.98 [68783c85][4d897159]. Foreign Institutional Investors (FIIs) have been significant contributors to this trend, with approximately $11 billion exiting Indian markets in October and ₹3,024.31 crore in shares sold on November 12 alone [4d897159][68783c85].
Despite fears of sharp depreciation, the SBI report indicates that the rupee's weakening may not be as severe as during the previous Trump administration, suggesting that the impact might be less than during President Biden's term [13a508da]. A weaker rupee could potentially benefit Indian exports in textiles, manufacturing, and agriculture, as these sectors may become more competitive internationally [13a508da].
The Reserve Bank of India (RBI) has been intervening in the currency market to stabilize the rupee, reportedly selling dollars to mitigate its depreciation. This intervention has contributed to a decrease in India's foreign exchange reserves, which have fallen to approximately $682 billion from a peak of $704 billion [68783c85][aa76eb5b]. Analysts predict that the rupee may continue to trade between ₹83.80 and ₹84.50 in the medium term as market pressures remain significant [5c079846][4d897159].
Market indices reflected the rupee's struggles, with the Sensex and Nifty indices falling by 210.66 points and 100.45 points, respectively [68783c85]. Rising crude oil prices, with Brent crude reaching $72.07 per barrel, and the upcoming Consumer Price Index (CPI) data for October are additional concerns for the Indian economy [4d897159][68783c85].
The H-1B visa issue is expected to impact the Indian IT sector, but it may also strengthen domestic manufacturing as shifts in foreign direct investments (FDIs) are anticipated. New sectors like non-conventional energy and medical appliances are expected to attract FDI, while traditional FDI sources are becoming less critical [13a508da]. As the situation evolves, market participants are closely monitoring these economic factors and their implications for both domestic and global economic landscapes [2dc7b490].