Rupee Declines to 84.28, RBI Signals Economic Stability - Read Now

The Indian rupee fell sharply to its lowest point in more than four months with a decline of 17 paise or 0.2% in the US dollar, closing at 84.28. The rupee fell by as much as 74 paise after the results of the US presidential election flashed that Donald Trump would be the next President of the United States.

On the other hand, RBI intervened to curb the fall in the rupee, but the currency hit an all-time low after all such interventions. The RBI governor, Shaktikanta Das, also spoke on this issue. India's economy and financial sector, he said, have shown resilience amidst global economic uncertainties. "We are definitely impacted by what's happening in the rest of the world.". We are not armchair regulators sitting on the sideline while watching this happen in our domestic market; we are very much there in the market, Das said.

In a relatively strengthened US dollar, several currencies faced huge erosion pressure, and the Indian rupee was one among them. The dollar index climbed 1.8%, fueled by fears over potential trade tariffs and sanctions. Dealers added that with roughly $700 billion in foreign exchange reserve, the capacity of the RBI to stabilize the rupee would be limited if it continues to gain against major currencies.

Strong Dollar Bites Global Currency Markets
India's rupee fared better in preventing its slide against most currencies, but nonetheless, the impact of the appreciation of the dollar was felt all across the world. The Mexican peso was one of the worst victims in the event, as it plummeted to its lowest in two years. The euro also lost more than 2%, as it took its position as the center of concern for potential trade war situations. The Chinese yuan fell 1.1%, the sharpest one-day drop since last October, as investors feared a Donald J. Trump administration might hike taxes on imported Chinese goods. The South African rand fell 2.2%.

RBI's Reserves and Economic Stability
The intervention of the RBI helped stabilize the rupee to some extent, thus preventing its further fall. Governor Shaktikanta Das expressed confidence in India's economy and assured the nation that "the central bank will do whatever it takes to protect the Indian currency.".

The rupee fall is part of the overall trend that has been facing the emerging markets, with the dollar growing stronger, bringing with it economic stress and uncertainty to global trade. However, Das pointed out that Indian economic fundamentals are strong enough to withstand external pressure and noted that RBI is not one to let its guard down as it closely monitors the situation in support of the rupee as it feels fit.

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