On slippery slope: Rupee hits fresh low, extends losing streak to 7 years

Despite the decline, India's foreign exchange reserves remain the fourth largest in the world

The Indian rupee ended 2024 at a fresh closing low of 85.61 per US dollar, slipping 0.09 per cent on Tuesday. This marked the seventh straight year of depreciation against the greenback.  After a 10 per cent fall in 2022 following the war in Europe, the Reserve Bank of India (RBI) intervened to keep the rupee in a tight range, resulting in a modest 0.6 per cent decline in 2023.  Till mid-September this year, the rupee remained one of the most stable currencies.However, it came under pressure in the final quarter due to two major global developments — a US Federal Reserve interest rate cut and Donald Trump’s victory in the US presidential election. 

  In the October-December period, the unit depreciated by 1.8 per cent, including a 1.31 per cent drop in December.  India’s foreign exchange reserves fell by nearly $60 billion in the past three months as the RBI intervened to curb volatility. 

The reserves, which touched an all-time high of $705 billion in September, ended the year at $644.4 billion. Despite the decline, India’s reserves remain the fourth-largest globally, covering 99 per cent of the country’s external debt or nearly a year of merchandise imports as of September-end.