Rupee slide not a weakness as currency depreciated but not volatile, says SBI Research as INR breaches 90 per Dollar
Rupee slide not a weakness as currency depreciated but not volatile, says SBI Research as INR breaches 90 per Dollar
SBI Research asserts that the Rupee's slide to 90 per Dollar should not be seen as a weakness, despite its depreciation. The currency's decline is attributed to US-India trade uncertainties, FPI outflows, and RBI's non-interventionist stance. However, the Rupee remains one of the least volatile currencies, indicating resilience amidst global economic pressures.
Rupee depreciation as being ascertained by a section of market to a negative trade data is not factually correct, said SBI Research
SBI Research today said a sliding Rupee should be not considered as a weak Rupee even as it has breached the psychological mark of 90 per dollar. Rupee slumped to 90.43 per Dollar in the opening trade today.
“Rupee breached a psychologically important level of 90 today, the slide one of the quickest in recent times after the heady days of Taper tantrum,” SBI Research said in its report – ECOWRAP today.
“The decline in the value of the currency is being driven to the edge by trifecta of limbos in US-India trade deal, FPI outflows, chiefly equities (after two years of robust inflows) and RBI’s clear stance of distancing itself from an ’interventionist regime’ while wagering all it takes on excessive volatility by traders, arbitrageurs and jobbers,” it said.
Pointing out that decline in value of Rupee as being ascertained by a section of market to a negative trade data is not factually correct, it said, “The overall goods and services deficit till Apr-Oct was at $78 bn, marginally higher against $70 bn in the like period the previous year. Clearly, the negative data on trade data has been oversold to the market.”
“Since 02 Apr’25, when US announced sweeping tariff hikes across economies, Indian rupee (INR) has deprecated by 5.5% against USD (most amongst the major economies), notwithstanding sporadic phases of appreciation owing to optimism over positive, mutually beneficial conclusion,” it said.
“However, while INR is the most depreciated currency amidst select major economies, it is not the most volatile. INR is one of the least volatile currencies since 02 Apr’25 (1.7%). This clearly indicates that the high slab of 50% tariff imposed on India, substantially higher than peers like China (30%), Vietnam (20%), Indonesia (19%), and Japan (15%), is one of the major factors behind current phase, notwithstanding evident efforts on Indian exports diversification and FTAs though $45 billion worth of major Indian exports is expected to be impacted by US tariff, mostly in labour intensive areas.