The Rupee Crisis: The Impact of a Strong Dollar and the Underlying Economic Dynamics

The Indian Rupee fell to as low as 88.7437 per dollar on October 30 (local time), nearing the all-time low of 88.8050 recorded in September, due to the strengthening of the US dollar and diminishing expectations for an early rate cut by the US Federal Reserve. Since September, the RBI (Reserve Bank of India) has been defending the rupee by selling dollars through state-owned banks, but strong intervention in the spot market was not observed on this day. Analysts suggest that if the rupee clearly surpasses 88.8050, the psychological level of "90" could come into focus. On the other hand, end-of-month real demand, dollar demand from import companies, and capital outflows are weighing on the currency. On the following day, October 31, the rupee closed around 88.69, remaining within "historical range," and the monthly trend was largely flat. On social media, there was both caution about approaching "90" and practical advice to strengthen hedging and advance raw material procurement.