The Indian currency rupee has weakened by 3 percent against the US dollar in the year 2024. The rupee has been affected due to the slowdown in the economy and strengthening of the dollar in global markets. However, compared to other currencies of the world, the fluctuations in the Indian rupee have been quite less. In such a situation, it is expected that the position of the rupee will be somewhat better in the coming year. At the end of the year 2024, the rupee fell to its new record low. The improvement in the dollar has had an impact on the currencies of emerging markets.
2024, which was full of events, significantly influenced the exchange rate of the rupee. Russia-Ukraine war, crisis in West Asia, bottlenecks in trade through the Red Sea and elections in many countries of the world affected the sentiment of the rupee. Steps taken by the world’s major central banks and other global factors have not only affected the rupee-dollar level, but have also impacted the exchange rates of currencies in all emerging economies.
Jatin Trivedi, Vice President Research Analyst – Commodity & Currency, LKP Securities, said the biggest weakness in the rupee was seen in the last 6 months of 2024, especially between October and December, when foreign institutional investors witnessed massive withdrawals. of. He said that during this period there was a withdrawal of about Rs 1.70 lakh crore from FIIs in the Indian stock markets. This had a huge impact on the performance of the rupee.
Rupee fell to a record low of 85.80 per dollar on December 27.
Daily exchange data of the rupee against major currencies shows that the rupee has lost 3 per cent till December 27 compared to the level of 83.19 per dollar on January 1 this year. On December 27, the rupee was at a low of 85.59 per dollar. There has been a record decline of Rs 2 in the Indian currency against the dollar in the last 2 months.
On October 10, the rupee crossed the important level of 84 per dollar. On December 19, it further weakened to a low of 85 percent to the dollar. The rupee touched its record low of 85.80 per dollar during daytime trading on December 27. That day the rupee saw its biggest single-day fall in 2 years.
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Rupee stronger against Euro and Japanese Yen
However, compared to the fall in other currencies against the dollar, the fall in the rupee has been less. The rupee has been in profit against the Euro and the Japanese Yen. The rupee has strengthened by 8.7 percent against the yen. It rose from ₹ 58.99 per 100 yen on January 1 to ₹ 54.26 per 100 yen on December 27. Similarly, the rupee has improved by 5 percent against the euro after August 27. On August 27, it was at Rs 93.75 per euro and on December 27, it stood at Rs 89.11 per euro.
Experts say that due to better macroeconomic factors in America, there has been an unprecedented rise in the dollar. This is the reason why the US central bank Federal Reserve has indicated to reduce interest rate cuts. Experts say that America’s newly elected President Donald Trump has expressed his intention to increase the duty on imports from China. Due to this, the demand for dollars has increased among currency traders around the world.
RBI is trying its best to stop the fall of rupee
Former Reserve Bank of India (RBI) Governor Shaktikanta Das had said in December’s bi-monthly monetary policy review that the Indian rupee has been less volatile than emerging market currencies. However, despite this the central bank is making more active efforts to stabilize the rupee-dollar rate. Demand for the US dollar has increased due to India’s dependence on crude oil imports and increasing trade deficit. According to news agency PTI, Naveen Mathur, Director – Commodities and Currencies, Anand Rathi Shares & Stock Brokers, said, “RBI has actively intervened to stop the sharp decline in the rupee.”
India’s external challenges have intensified as China’s GDP growth has slowed to 4.8 percent. Due to this the demand for Indian exports has reduced. Apart from this, the tension in West Asia and the disruption in the supply chain due to the Red Sea crisis have affected the trade balance of many countries including India.
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How will the rupee move in 2025?
Ajit Mishra, Senior Vice President (Research), Religare Broking Limited, said that the outlook for the Indian currency next year is relatively stable and it is expected to remain between 82 to 87 against the dollar. “Government policy measures and improvement in domestic economic growth could support a potential recovery in the rupee,” Mishra said. Several global events are expected to influence currency market trends in 2025. The most important signals are expected to come from the US Federal Reserve’s interest rate changes and President Donald Trump’s trade measures, which could make Chinese imports costlier. This may increase inflation in America.
India’s economic growth is estimated to be 6.5-7.5 percent for 2025. This may support the rupee, while monetary easing by the RBI to encourage growth may have an adverse impact on the currency. “For 2025, we expect the rupee to fall to Rs 87/dollar. The upside may be limited to Rs 83,” said Anuj Chaudhary, research analyst at Mirae Asset Sharekhan.