Key Points
- The rupee fell to a new record low of 84.6637 per dollar.
- Economic growth slowed to its weakest rate in nearly two years.
- A stronger US dollar put pressure on emerging-market currencies, including the rupee.
- Traders expect the Reserve Bank of India to cut interest rates, which caused bond yields to drop.
- India’s five-year bond yield decreased to 6.62% as traders bet on easing measures.
Looma News
The Indian rupee hit a new record low of 84.6637 per dollar after new data showed that India’s economy grew at its slowest pace in nearly two years. The 0.2% drop came after a report revealed the economy expanded much slower than expected. This slowdown raised concerns about the country’s financial outlook, especially as a stronger US dollar continued to hurt emerging-market currencies, including the rupee.
Michael Wan, a senior currency analyst at MUFG Bank, said that the poor GDP data may make the Reserve Bank of India less likely to intervene aggressively in the currency market. This could lead to the rupee gradually losing value over time. The economic uncertainty also raised speculation that the RBI might cut interest rates sooner than expected to help boost growth.
As a result, India’s five-year bond yield dropped almost six basis points to 6.62%, with traders now betting that the RBI will announce interest rate cuts when it meets on December 6. The bond market is closely watching the central bank’s next move, hoping it will act to support the economy as growth slows down.
