The Indian rupee has once again lost its footing against the US dollar. The INR hit its lowest level against the US dollar on Tuesday, trading at 84.92 at press time. Speculation surrounding rate cuts by the RBI is also gaining traction, hitting the INR to trade under low waters as of late.

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Why Is the Indian Rupee Dropping to Low Levels?

The Indian equity domain is currently projecting a mellow stance, encountering a weakened market pace. This development is adding to the INR woes, pushing the Indian currency down to new lows. At the same time, the rising dollar demand, with competitors showing confidence in the dollar as Trump takes over the US political regime, is also a strong development, causing INR to hit weak price spots.

The pressure on the rupee has further been intensified by increased gold imports and the decreased export situation that India has been documenting lately. The Indian export stats have fallen by 4.85% year on year to USD 32.11 billion in November.

The Indian equity market is also encountering a weaker momentum, with foreign institutional interest dampening. The FII stats continue to tumble down as foreign investors pull investments out of the Indian market. On Monday, the FII sold shares worth 278 crores in the Indian market, exhibiting low confidence in the Indian economy. At the same time, the change in RBI’s leadership is also prompting rate cut speculation, adding more pressure to the INR’s value.

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USD Gains Momentum: The Trump Connection

The US dollar is exhibiting a strong market position, driven primarily by the US political regime change that is set to materialize in January 2025. Donald Trump is all set to take over the reins of the US economy, vowing to protect the US dollar’s prestige in the long haul.

Trump’s potential policy overhauls may inflate the US dollar, delivering it a strong position and ability to defeat its currency competitors.

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“The idea that the BRICS countries are trying to move away from the dollar while we stand by and watch is OVER. We require a commitment from these countries that they will neither create a new BRICS currency nor back any other currency to replace the mighty U.S. dollar, or they will face 100% tariffs and should expect to say goodbye to selling into the wonderful U.S. economy. They can go find another “sucker!” There is no chance that the BRICS will replace the U.S. dollar in international trade, and any country that tries should wave goodbye to America.”