The Indian Rupee has hit a new record low against the US Dollar. On Tuesday, December 10, the Rupee was trading at 84.85 per dollar, lower than last week’s previous record of 84.7575 per dollar.
Simultaneously, the yield on India’s 10-year government bond dropped by 2 basis points to stand at 6.6954%.
According to Reuters, this situation arose due to expectations of a rate cut following the announcement of Sanjay Malhotra as the new governor of the Reserve Bank of India (RBI). Malhotra will take charge on December 11, succeeding outgoing governor Shaktikanta Das, whose six-year term ended on Tuesday.
Sanjay Malhotra, who previously served as the Revenue Secretary in the Ministry of Finance, has been appointed as RBI Governor for a three-year term.
Experts believe Malhotra’s appointment may bring a “dovish” stance to monetary policy. Shaktikanta Das and RBI Deputy Governor Michael Patra had maintained a “hawkish” approach to monetary policy. Patra’s term ends in January, after which a new deputy governor will be appointed.
Traders have indicated that the Reserve Bank of India has already intervened to curb the Rupee’s depreciation.
While the central bank has kept interest rates unchanged, it effectively eased monetary policy on December 6 by reducing the cash reserve ratio (CRR).
A trader from a foreign bank mentioned that if the RBI adopts a growth-centric policy, interest rates may decline, leading to further depreciation of the currency.