The Indian rupee experienced further losses against the dollar in November. On a monthly basis, it is currently down 0.7% against the dollar and has also declined 1.4% compared to same time last year. After a sharp fall at the beginning of August when the rupee saw its biggest daily drop in the past six years, the weakness in the currency remained in the subsequent months.
In early November, the rupee slipped further after the US-based ratings agency, Moody’s lowered the country’s outlook from stable to negative. Moody’s cited ‘lower government and policy effectiveness at addressing longstanding economic and institutional weaknesses’, further focusing on a weak economic growth and the risk of increasing government debt level.
India’s economy slowed to a growth of 4.5% in the third quarter of 2019, a sixth consecutive quarter of easing growth, and significantly below previous predictions for 2019.
Despite the slowing economy, India’s central bank has decided to leave its benchmark interest rate unchanged at the beginning of December, taking a cautionary approach amid rising inflation.
Further adding to the bearish sentiment around the currency are concerns over a slowdown in global trade due to the ongoing US-China tensions.
