Rupee outlook: Currency slips to 89.53 against US dollar; manufacturing and industrial growth slow
Forex traders said limited intervention by the central bank and delays in the India–US trade deal have also contributed to the rupee’s ongoing weakness.At the interbank market, the rupee began at 89.45 and dropped to a fresh intraday low of 89.79, down 34 paise from its previous closing level.
Its prior record low of 89.66 was seen on November 21, when it fell 98 paise.
On Friday, the currency had ended the session at 89.45.“The outlook for the rupee to remain under pressure versus the US dollar for the coming days, as the underlying imbalance between demand and supply for the US dollar is likely to persist,” said Dilip Parmar, Senior Research Analyst at HDFC Securities, as quoted by PTI.
He added that in the near term, USD-INR has resistance at 89.95 and support at 89.30.Globally, the dollar index, which tracks the US currency against six major currencies, was up 0.17 per cent at 99.28.
Meanwhile, Brent crude futures rose 1.86 per cent to $63.55 per barrel.Domestic equity markets also retreated, with the Sensex falling 64.77 points to 85,641.90 and the Nifty losing 27.20 points to close at 26,175.75.
Foreign institutional investors offloaded shares worth Rs 1,171.31 crore on a net basis.Economic indicators suggested slowing momentum in manufacturing and industrial output.
The HSBC India Manufacturing PMI eased to 56.6 in November from 59.2 in October, marking the slowest improvement in operating conditions since February, due to a softer rise in production and sales.
Industrial production in October expanded only 0.4 per cent year-on-year, a sharp slowdown from the 3.7 per cent recorded the previous year, according to official data.Foreign direct investment (FDI) showed stronger inflows, rising 18 per cent to $35.18 billion in April–September this fiscal.
Investment from the US more than doubled to $6.62 billion during the first half of the year, up from $29.79 billion over the same period in FY24.However, Goods and Services Tax (GST) collections fell to a year-low of Rs 1.70 lakh crore in November, growing just 0.7 per cent year-on-year after adjusting for cess exclusions on sin and luxury goods.Forex traders said investors are treading carefully amid ongoing trade tensions with the US, while the government remains hopeful of progress.
On November 28, commerce secretary Rajesh Agrawal said India expects a framework trade deal with the US by the end of the year, which would resolve tariff-related issues.
Prolonged negotiations and recent tariffs imposed by the Trump administration, however, have slowed the pace of the first tranche of the bilateral deal.
