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The Indian rupee is under pressure, expected to open lower against a strong US dollar, driven by the Federal Reserve's high interest rate policies and anticipation of economic changes.

What does this mean?

The rupee has set record lows for six consecutive sessions, reflecting broader regional economic trends and a formidable US dollar. India's economy struggles with slow growth and a widening trade deficit, exacerbating the currency's depreciation. Currently at 85.63 to the dollar, the currency's movement aligns with trends despite holiday market closures. The Reserve Bank of India is preparing for strategic reviews as the new governor navigates these monetary challenges.

The rupee's decline impacts not only local markets but also investors with stakes in Indian assets. Foreign investors withdrew $187.1 million from Indian equities and $125.3 million from bonds on December 30. Continued currency depreciation could indicate further capital flight, potentially increasing market volatility and affecting investment returns.

The bigger picture: Economic resilience under scrutiny.

The rupee's struggles highlight a common theme for developing economies: heightened currency pressures following major US policy shifts. The Fed's strategies and anticipated policies illustrate these challenges, signaling tighter global liquidity and possible effects on international trade.