The US Dollar is on a tear in June 2024, leaving a trail of weakened Asian currencies in its wake. This trend has traders cautious, particularly with the Indian rupee hitting a record low against the greenback.
On Wednesday, the rupee opened at a dismal 83.57, the weakest it’s ever been. This weakness extends across the region, with the US dollar outperforming 22 out of the top 23 local Asian currencies this month. This dominance is reflected in the DXY index, a gauge of the dollar’s strength, which has climbed above 105.20.
This unexpected surge in the US dollar’s value comes despite earlier predictions of its decline. Now, currency traders are hesitant to invest in the Indian rupee, fearing further depreciation against the resurgent dollar. Their focus lies on upcoming US economic data, particularly the Consumer Price Index (CPI) report and the Federal Open Market Committee (FOMC) decision. These events will likely influence the dollar’s trajectory, with most bets currently favoring continued strength.
Analysts warn that the rupee could fall even further, potentially reaching a resistance level of 83.72, a decline of nearly 0.2% from its current lows. The situation isn’t unique to India. The Chinese yuan has also slumped to a six-month low, while the Japanese yen finds itself at its weakest point since the early 1990s.
Also Read: BRICS Go Rogue: US Dollar on Notice as India & Nigeria Ditch It for Local Trade – Boon for Bitcoin?
This trend has significant implications for international trade and investment. A stronger dollar makes imports from the US more expensive for Asian countries, while exports from Asia become cheaper in dollar terms. This could potentially impact trade balances and economic growth in the region.
Financial markets will be closely watching the upcoming US economic data releases and the FOMC decision for further clues on the dollar’s path. Whether the US dollar maintains its dominance or if Asian currencies can stage a comeback remains to be seen.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
About The Author
